Martial Arts: "Trade and Investment Companies Dealing with China Must Be Cautious... Successive Trade and Commerce Measures"

[Asia Economy Reporter Kim Heung-soon] Recently, China has been announcing a series of countermeasures in the trade and commerce sector in response to the United States' sanctions against China, prompting opinions that companies engaged in trade and investment with China need to exercise special caution.

According to the "China's Implementation of Measures to Prevent Unfair Extraterritorial Application of Foreign Laws and Measures" announced by the Korea International Trade Association's Trade Support Center on the 22nd, China simultaneously announced and implemented a Ministry of Commerce order on the 9th that allows it to issue orders prohibiting compliance with foreign laws and measures unfairly applied within Chinese territory.

According to this order, China can take retaliatory measures at the state-to-state level against unfair application of foreign laws, and Chinese companies suffering damages due to the enforcement of such foreign laws can claim compensation within China from the entities that enforced them.

The report interpreted this as a response to the U.S. measures based on its domestic laws during the four years of the Trump administration, such as additional tariffs on Chinese products, export controls, and restrictions on Chinese investment in the U.S.

The trade and commerce measures announced by China in response to U.S. actions against China have been the fourth since September last year. Among these, three were intensively implemented in December last year and January this year.

In September last year, China, through the Ministry of Commerce-level "Regulations on the List of Unreliable Entities," enabled retaliatory actions such as restricting exports and imports with China against foreign companies that harm national interests. In December, China enacted the "Export Control Law," establishing grounds to impose export controls and retaliatory measures against countries that harm China's national security and interests.

Starting from the 18th of this month, through the "Foreign Investment Security Review Measures," China will review the impact of foreign investments on China's security and interests on a case-by-case basis, and if it is judged that there will be negative effects, it will not grant investment approval unless measures to resolve these issues in advance are taken.

The report pointed out that China's retaliatory measures under this Ministry of Commerce order are highly likely to be organically implemented in combination with retaliatory measures stipulated in various trade and commerce control measures depending on the future U.S. Biden administration's China policy.

Lee Won-seok, senior researcher at the Korea International Trade Association, emphasized, "There is a high possibility that the Biden administration will maintain a tough stance on China even after its inauguration," adding, "Companies investing in China should be fully prepared for the possibility that China may take discriminatory measures against foreign-invested companies in the process of issuing various countermeasures."