The Chinese government has ordered its citizens and domestic organisations to disregard United States sanctions imposed on five Chinese oil refineries accused of processing Iranian crude oil.
According to Al Jazeera, this move represents the first official invocation of the “Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures,” a legal framework established in 2021 to combat foreign punitive measures.
The Ministry of Commerce issued a “prohibition order” following the US Department of the Treasury’s announcement last month of sanctions targeting one of the nation’s largest independent “teapot” refineries.
According to the ministry’s announcement on Saturday, the sanctions against Hengli Petrochemical (Dalian) and four other previously targeted refineries “shall not be recognised, enforced or complied with”.
Beijing has characterised the US measures as an unjustified exercise of “long-arm jurisdiction” that violates international law and “improperly” restricts legitimate trade.
The ministry stated the order is intended to protect China’s “national sovereignty, security, and development interests,” as well as the “lawful rights and interests of Chinese citizens”.
The government further emphasised its opposition to unilateral sanctions that lack United Nations authorisation and a basis in international law.
The US Treasury Department imposed the latest restrictions after alleging that Hengli Petrochemical had generated hundreds of millions of dollars in revenue for the Iranian military through crude oil purchases.
Washington described the refinery as “one of Tehran’s most valued customers”. China remains the primary trade partner for Iran and is its largest buyer of oil, receiving more than 80 per cent of Iran’s oil shipments in 2025, according to data from the market intelligence firm Kpler.
Under the 2021 anti-sanctions law, Chinese citizens and organisations restricted by foreign legislation are required to report their situation to the Ministry of Commerce within 30 days.
Failure to comply with these reporting requirements can result in penalties, including warnings or fines. If the ministry determines, following a 30-day review, that the foreign application of law is “unjustified,” it can issue an order barring compliance.
Additionally, businesses suffering losses due to another party’s compliance with foreign sanctions may seek compensation through Chinese court proceedings and may receive “necessary support” from the government.
Dominic Chiu, a China analyst at the political risk adviser Eurasia Group, noted that the move signals Beijing is adopting a “more assertive approach” and demonstrates a “lower threshold” for deploying its legal and regulatory toolkit.
Naimeh Masumy, a PhD candidate at Maastricht University, observed that the law formalises China’s resistance into statute law, moving beyond ad-hoc diplomatic protests.
She stated that Beijing now views US sanctions as a systemic, long-term challenge requiring a structural legal response.
The escalation places international firms in a precarious position, potentially forcing them to choose between complying with Washington or Beijing.
While companies with high exposure to the US financial system or American banks may still prioritise US regulations to avoid “devastating” consequences, the calculation “shifts considerably” for state-owned enterprises or those heavily focused on the Chinese market.
While Chinese state media, including the Global Times, has hailed the order as a model for the international community to resist “unilateral bullying,” some analysts remain sceptical.
Chiu suggested the model might be less effective for countries like Russia or Iran that are already largely severed from the US dollar-clearing system, as a domestic blocking order adds little practical value for entities already cut off from US financial access.
