For decades, U.S. officials, businesses, and organizations have urged China to adopt the rule of law. “China has a great future ahead of it,” U.S. Ambassador Gary Locke said in his farewell speech in 2014. To get there, he said, it needs “reverence toward the rule of law.” American chambers of commerce and business leaders like JP Morgan Chase CEO
have long called for more rule of law in China, echoing the executive branch of the United States government. “For 30 years every president, regardless of party,” President
said in 2000, has pushed for a China that “upholds the rule of law at home and abroad.”
Be careful what you wish for. China is becoming a country that institutes and implements laws, and then follows them. What politicians, activists and American businesses have long called for is happening. But this development is chilling speech and stymying global business executives, in both China and globally. The problem is with the laws themselves, and the Chinese Communist Party which enforces them.
On June 10, China’s legislature the National People’s Congress approved the “Anti-Foreign Sanctions Law.” The law criminalizes the sanctioning of China by any organization, or individual.
But it goes further. According to the legal blog NPC Observer, the law permits civil suits in Chinese courts against those that implement, or assist in the implementation of, “discriminatory restrictive measures” that harm Chinese people’s “lawful rights and interests.”
Moreover, the law not only applies to the individuals who take an action, but the organization he or she manages—and any immediate family members as well. The law may be narrowly implemented against U.S. and European government officials, or may apply to the thousands of Westerners who have called for or helped implement sanctions against China. For example, my arguing that some officials in the northwest region of Xinjiang deserve to be sanctioned for committing genocide against the Uyghur people may legally permit Beijing to deny my brothers’ visas to China, or, if they had assets in China, to seize them. For business leaders, it incentivizes them to not be seen as saying anything that could express support for sanctions. Otherwise they jeopardize the safety of their staff, and their company’s assets.
That law is similar in scope to the Hong Kong National Security Law, implemented in the summer of 2020. Under that law, anyone advocating for democracy in Hong Kong, broadly speaking, is breaking the law. “It literally applies to every single person on the planet. This is how it reads,” said the Chinese-American lawyer Wang Minyao. “If I appear at a congressional committee in D.C. and say something critical, that literally would be a violation of this law.”
This trend is a mixed result for foreign businesses operating in China. On one hand, it’s offering more clarity on what is or isn’t legally permitted. The days are mostly over when businesses lived by the Chinese maxim “Above there are the laws, and below there is a way of skirting the laws.” Now, in many areas, the Chinese law is clearer.
The quandary for foreign companies is twofold. First, these laws may restrict their ability to flourish in China. When Apple complies with Chinese laws and shares sensitive data with a state-run Chinese firm, say, or…