China’s Anti-Foreign Sanctions Law (AFSL), in place since June 2021, has been updated with new regulations from the State Council, released in March 2025. These clarify how the law works and what it means for businesses operating in China. For British companies, particularly those balancing operations in China with ties to markets like the UK or US, it’s worth understanding these rules to stay on the right track.
What’s the AFSL all about?
The AFSL is China’s way of responding to what it sees as unfair economic measures, like sanctions or trade restrictions, from other countries targeting Chinese companies or citizens. It’s largely a reaction to actions from places like the US or EU, especially since trade tensions have ramped up in recent years. For British businesses with a presence in China, whether in tech, manufacturing, or education, the law matters because it could affect how you manage compliance across different markets. The new regulations spell out who might be targeted, what measures could apply, and how you can respond if needed, giving UK firms a clearer picture to work with.
Who might the AFSL affect?
Under Article 3 of the AFSL, China can take “countermeasures” against individuals or organisations involved in what it considers “discriminatory or restrictive measures” against Chinese interests. The new rules clarify this could include:
- People or companies directly involved in creating or enforcing foreign sanctions.
- Senior managers or controllers of those organisations.
- Businesses linked to or controlled by those on the “countermeasure list.”
If you’re on this list, you might face things like visa restrictions, limits on working with Chinese partners, or having assets in China frozen. For a British firm, this could mean a pause on collaborations with local suppliers or restricted access to funds in China. However, there’s a process to appeal, and the regulations suggest decisions aren’t made lightly.
What happens if you don’t follow the rules?
The AFSL asks companies in China to align with its countermeasures, like not enforcing foreign sanctions against Chinese entities. If you don’t comply, you could face restrictions on doing business in China or, in some cases, lawsuits from Chinese companies or individuals who feel impacted. The law’s a bit vague on whether it applies only to actions in China, so there’s a chance that complying with UK sanctions could raise questions under the AFSL. For British businesses with global operations, this means you’ll need to think carefully about how to balance compliance across jurisdictions, but it’s manageable with the right planning.
What’s new in the 2025 regulations?
The State Council’s latest rules give more detail on how the AFSL works, which is helpful for British firms looking to stay compliant. Here’s what you need to know:
Thoughtful assessments
Before applying countermeasures, the State Council must investigate and assess whether they’re necessary. This means decisions should be well-considered, giving UK businesses some reassurance that measures won’t come out of the blue. You can also apply to have measures lifted if you show you’re compliant.
What can be affected?
The rules clarify that “property” includes things like cash, intellectual property, or bank deposits in China. For a British company with assets like patents or investments in China, it’s worth keeping this in mind when planning.
Broader business activities
Countermeasures might touch sectors like education, technology or tourism. If you’re a UK university with partnerships in China or a tech firm with local operations, it’s a good idea to check how your activities align with the AFSL.
Options for resolution
If a Chinese entity believes your actions support foreign sanctions, it could file a lawsuit seeking compensation. But you can also appeal countermeasures by showing you’ve addressed any issues, like through compliance training or internal audits. This gives British firms a way to resolve disputes constructively.
How has the AFSL been used?
China has applied the AFSL a few times already. In July 2021, it targeted US individuals, like former Commerce Secretary Wilbur Ross, over sanctions related to Hong Kong. More recently, in October and December 2024, it hit US defence firms with measures like asset freezes over arms sales to Taiwan. While no British companies have been named yet, these examples show the law is in play, especially for firms in sensitive sectors like tech or defence. For UK businesses, it’s a signal to stay informed, but not a reason to panic.
How can British businesses stay prepared?
The updated AFSL regulations highlight the need for British companies to be proactive, but they also offer clarity and options for staying compliant. The key is to plan smartly without getting overwhelmed. Here’s how:
- Check your operations to see if UK or international sanctions might overlap with the AFSL.
- Work with experts to understand the law’s nuances.
- Run compliance audits to ensure your business aligns with Chinese regulations.
- Stay updated on changes to the AFSL, as its scope might evolve.
For instance, a British retailer sourcing goods from China while following UK trade rules should review whether those rules could be seen as “discriminatory” in China. A quick compliance check can keep things running smoothly.
