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President Trump will\u00a0meet\u00a0Chairman Xi Jinping in Beijing on May 14\u201315. Xi Jinping has all the high cards, and he knows it. China made sure President Trump knows it, too.<\/p>\n
On May 2, China\u2019s Ministry of Commerce (MOFCOM) issued Announcement No. 21. The operative language\u00a0is built on three unambiguous negatives that govern how Chinese parties must treat U.S. sanctions: \u201cshall not recognize,\u201d \u201cshall not enforce,\u201d and \u201cshall not comply with.\u201d Every Chinese citizen, company, and organization is directed to apply those three prohibitions to Trump\u2019s Executive Order 13902 of January 10, 2020, and Executive Order 13846 of August 6, 2018, which sanction any individual or firm that trades with the Iranian regime. Invoking those orders, the U.S. Treasury on April 24 of this year designated five Chinese refiners for buying Iranian crude \u2014 Hengli Petrochemical (Dalian) and four smaller producers in Shandong and Hebei. With Announcement No. 21,\u00a0Beijing has declared those sanctions unenforceable on Chinese soil.<\/p>\n
Two things are noteworthy: what China did, and when it did it.<\/p>\n
The choice of instrument is the first thing to understand \u2014 and it is unprecedented.\u00a0China\u2019s Ministry of Commerce promulgated the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation on January 9, 2021. For more than five years, they went unused. With\u00a0Announcement No. 21, Beijing has invoked the Rules for the first time to bring a case, effectively dusting off a long-dormant statute. Now that it has been activated, this prohibition is unlikely to remain a one-off tool.<\/p>\n
Some might argue that the practical bite of Beijing\u2019s recent move is small, that four of the five named refiners are small potatoes.\u00a0But this is a move with teeth.<\/p>\n
Until last weekend, Beijing\u2019s statutes were a paper tiger. With the issuance of Announcement No. 21,\u00a0that changed. The order activates, for the first time, a private right of action. Its implications are sweeping.<\/p>\n
Here is the mechanism:\u00a0if a U.S. or foreign bank, trader, insurer, or shipper were to cut off one of the five named refineries to comply with U.S. sanctions, the refinery could sue for damages in a Chinese court.<\/p>\n
The second aspect of Beijing\u2019s counterattack is its timing. The announcement was immediate\u00a0and\u00a0a deliberate prelude to\u00a0the Beijing summit. The Chinese\u00a0know exactly the hand they are holding \u2014 and exactly the hand the President is not.\u00a0Announcement No. 21 is the \u201cwelcome mat\u201d for Trump\u2019s arrival. The message to the American delegation is unmistakable: the rules of the road are being rewritten, and they are being rewritten in Beijing.<\/p>\n
The implications extend well beyond Beijing.\u00a0China leads the BRICS, and the BRICS will follow Beijing\u2019s template. For decades, Washington projected its sanctions architecture on the assumption that no major counterparty would counterattack with a reciprocal one.\u00a0That assumption expired on May 2.<\/p>\n
We have\u00a0long argued\u00a0that sanctions are cards played by losers. The historical record is unambiguous: sanctions rarely achieve their desired ends and often give rise to counterattacks. Announcement No. 21 is exactly that.<\/p>\n
It is Beijing\u2019s \u201cwelcome mat\u201d\u2014and its first shot.\u00a0It will not be its last.<\/p>\n
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of\u00a0<\/em>Fortune.<\/em><\/p>\n<\/div>\n #China #mat #Trump #rewrote #rules #U.S #sanctions<\/p>\n","protected":false},"excerpt":{"rendered":" President Trump will\u00a0meet\u00a0Chairman Xi Jinping in Beijing on May 14\u201315. Xi Jinping has all the high cards, and he knows it. China made sure President Trump knows it, too. On… <\/p>\n","protected":false},"author":1,"featured_media":1490,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[173,665,2637,2638,207,2639,260,599],"class_list":["post-1489","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-china","tag-donald-trump","tag-mat","tag-rewrote","tag-rules","tag-sanctions","tag-trump","tag-u-s"],"_links":{"self":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1489","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1489"}],"version-history":[{"count":0,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1489\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/media\/1490"}],"wp:attachment":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1489"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1489"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1489"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}