What are the governing regulations?
As a member of the UN Security Council, China adopts the UN sanction regimes. The UN Resolutions are introduced into local law by way of official announcements issued by the Ministry of Foreign Affairs of the People’s Republic of China (“MFA”) and notification to the State Council’s other functional departments, including the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, the General Administration of Customs, the Ministry of Commerce, the Ministry of Transport and etc., who may from time to time, but not always, produce regulations setting out detailed enforcement measures to be taken within their respective functions in line with UN’s resolutions.
So far, MFA has announced enforcement of UN sanctions against:
- North Korea
- Democratic Republic of the Congo
- Central African Republic
- South Sudan
- Cote d’Ivoire
Apart from UN sanction regimes, China rarely (if not never) declares its own unilateral sanctions against a particular jurisdiction. But parties should note that due to the complicated political relationship between China and Taiwan and Tibet, Taiwan and Tibet remain sensitive jurisdictions and can find themselves subject to Chinese imposed sanctions on sale and/or supply and/or transfer of arms, military equipments, related materials/techniques/training to these two jurisdictions.
Who shall comply with Chinese sanction regulations?
- all individuals, companies, vessels and aircrafts acting within the territory of China;
- Chinese citizens;
- Companies incorporated in China; and
- Vessels/aircrafts registered in China,
shall comply with Chinese sanction regulations.
What are the sanctioned good, services and activities?
The scope of sanctioned goods, services and activities varies for each jurisdiction according to Chinese sanction regulations. Most are limited to nuclear-related and military-related matters, whilst some may involve import and export of general commodities such as coal, iron ore, rare metals, oil and etc.. The scope of restrictions range from blanket banks to partial bans subject to conditions. Most conditions require obtaining prior approval or license, or that proper filings pursuant to the relevant regulations be carried out.
What are the penalties
It is worthnoting that currently, China does not have a specific and unified legislation giving national legal forces to sanction regimes. This has led to many uncertainties as to how compliance of the sanction regimes will be policed and enforced.
MFA’s announcements and the relevant regulations by the State Council’s functional departments do not set forth penalties for violation of sanction measures. What the penalties are and how the sanctions are enforced remains unclear to public. From experience, complaints of sanctions violations are handled by the government’s administrative departments on a case-by-case basis.