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As U.S. Treasury Secretary Janet Yellen concluded her four-day trip to China, calling it “productive,” the ink was barely dry on China’s sweeping new Foreign Relations Law that appears to be aimed at countering U.S. trade sanctions. 

The day before the bill took effect on July 1, China’s official Xinhua News Agency quoted an unnamed person in charge of the Legal Work Committee of the powerful Standing Committee of the National People’s Congress as saying, “China’s foreign-related legal system still has some shortcomings. Especially in terms of safeguarding national sovereignty, security and development interests, there are still many legal gaps.” 

The new law aims to close those holes, stressing Beijing’s right “to take corresponding countermeasures” against acts that violate international law and norms and “endanger China’s sovereignty, security and development interests.”  

The law comes as the government of President Xi Jinping is pushing back against American efforts to cut off its access to technology to make advanced computer chips and efforts to reduce reliance on Chinese suppliers after the global pandemic revealed the consequences of disrupting the supply chain. 

Einar Tangen, an American political and economic affairs commentator in Beijing, said the law essentially provides a legal basis for China to counter sanctions issued by the U.S. and other nations. 

“They want to signal in their own way that they had enough, because after they announced this, a few hours later they were talking about taking away gallium exports,” Tangen said, referring to Beijing’s July 3 announcement that it would restrict exports of gallium and germanium — key raw materials widely used in semiconductors and electric vehicles.  

“There’s only one paragraph in the new law which is actually new that gives specific authority to respond for national security reasons,” Tangen said. “It’s more of a signal to the U.S. that two can play this game.” 

Suisheng Zhao, a professor at the Josef Korbel School of International Studies at the University of Denver, also said the law contains little new.  

“It actually systematizes and legalizes Xi Jinping’s diplomatic thinking. To some extent, it is an external propaganda to strengthen China’s soft power, describing China as a major responsible country in the world and systematically presenting China’s so-called core interests, diplomatic behavior and principles,” Zhao told VOA Mandarin. 

China is currently the largest producer of gallium and germanium, accounting for 94% and 83% of global production, respectively. They have a wide range of applications in optoelectronic displays, communications, lasers, detectors, sensors, solar energy and radar. 

Shu Jueting, a spokesperson for the Ministry of Commerce, said that items related to the two metals have prominent dual-use properties for military and civilian purposes. She said it is an international practice to implement export controls on them. The regulations will come into force on August 1. 

Exporters who want to start or continue exporting items related to the two metals must apply for a license from China’s Ministry of Commerce and report details of overseas buyers and their applications.  

Hu Xijin, the influential former editor-in-chief of the Global Times, said on China’s Twitter-like Weibo platform, “China’s anti-sanctions, anti-interference, and anti-long-arm jurisdiction by certain countries require this law, and it will definitely increase the price for the United States and its allies to violate China’s interests.” 

The Global Times says with the law, China is “marking a milestone significance, as it is the first fundamental and comprehensive foreign-relations law that aims to fix the loopholes in the rule of law in foreign-related affairs amid new challenges in foreign relations, especially when China has been facing frequent external interference in its internal affairs under the Western hegemony with unilateral sanctions and long-arm jurisdiction.” 

Zhao told VOA Mandarin the new law “is mainly aimed at the domestic people. … Americans will not buy it. Xi Jinping’s international development initiative, international security Initiatives and the Belt and Road Initiative have been talked about a lot, and there is nothing new for the United States.”  

The Chinese government has long complained that the U.S. uses economic sanctions for diplomacy and says it passed the Anti-Foreign Sanctions Law in 2021 to counter foreign sanctions against Chinese companies and individuals. However, China also frequently uses economic sanctions to exert political pressure on such countries as Australia, Canada, South Korea and Lithuania. 

The current chip war between China and the U.S. is an example of how both nations employ sanctions.   

In October 2022, the U.S. Department of Commerce announced export controls on advanced semiconductor and chip manufacturing equipment to China.  

In May, the Chinese government announced a ban on the U.S. chip giant Micron, saying it caused a significant security risk to China’s critical information infrastructure supply chain. 

It followed Beijing’s announcement in February of sanctions against two U.S. arms makers — Lockheed Martin and Raytheon Technologies — for supplying arms to Taiwan, including banning Chinese companies from doing business with them. 

Recently, the Biden administration is reported to be preparing to restrict Chinese companies from using U.S. cloud computing services. If adopted, the new regulation could require U.S. cloud service providers, such as Amazon and Microsoft, to obtain a U.S. government license before providing cloud computing services that use advanced artificial intelligence chips to Chinese customers. 

“This is sending a clear signal right before Yellen’s visit” to China, Tangen said. “The U.S. is … going to keep Chinese companies out of the cloud.” 

He said the rift is causing a “split between the countries in terms of technology.” 

“Right now, I don’t think Beijing is counting on changing the minds of Washington elites,” Tangen said. “What they’re betting on now is that the business community, which has an interest in China, is not having a world decoupled. It will cost all American businesses a tremendous amount of money to relocate to other countries or within the U.S. to do the same thing.”   

Zhao believes the law does not make much of a difference.  

“When it first came out, people couldn’t figure it out,” he said. “But the heat passed within a day or two … and now there are not many people discussing it.”

Adrianna Zhang  contributed to this report.        

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