China Issues Rules to Stop ‘Unjustified’ Use of Foreign Laws

China issued new rules to block its companies and citizens from having to follow “unjustified” foreign laws and measures, in its latest riposte to U.S. restrictions on businesses likeByteDance Ltd.’s TikTok.

Therules on “counteracting unjustified extra-territorial application” of foreign legislation and other measures are effective immediately and allow authorities to ban the imposition of other jurisdictions’ laws on Chinese entities when it deems them inappropriate, the Ministry of Commerce said in a statement on its website on Saturday. The measures aim to protect “normal trade” and other activities, it said.

The Chinese move comes as outgoing U.S. President Donald Trump extends his campaign against Chinese compaanies in his final days in office, further straining ties between the world’s two largest economies. Trump earlier this monthbanned transactions with Chinese apps likeAnt Group Co.’s Alipay andTencent Holdings Ltd.’s digital wallets, adding to a prior push to force the sale of TikTok by ByteDance. The New York Stock Exchange has also become involved, heeding calls from the Trump administration todelist certain Chinese companies traded on its bourse.

Beijing also repeatedly pressured Canada to release Meng Wanzhou, daughter of Huawei Technologies Co.’s billionaire founder Ren Zhengfei, after she was detained by Canadian authorities over a year ago under the request of the U.S. government.

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The growing list of improper use of foreign laws overseas has “continuously disrupted the rules-based multilateral trade system and caused negative impact on the global economic recovery,” the commerce ministry said in a separate statement, citing Han Liyu, a law professor at the Renmin University of China.

A new working mechanism involving the commerce ministry and the top planning agency will oversee the assessment of such cases, and decisions will be based on considerations like whether international law has been violated and the potential impact on China’s sovereignty and the “legitimate rights” of Chinese entities, according to the statement.

Companies and citizens can sue in Chinese courts for compensation of losses incurred from foreign rulings deemed as unjustified under the new rules, the ministry said.

China isn’t unique in using such measures, as similar legislation has been in place in the European Union and countries like Canada and Mexico, Han said.

— With assistance by John Liu, and Dingmin Zhang

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