China Directly Links New Tough Rules Against Foreign Sanctions to the War in Iran and the Dispute Over Panama

China has linked the introduction of tough new supply-chain rules to the war in Iran and the dispute over the ports in Panama, warning that the announced measures are only “the beginning.” The statement comes amid rising tension ahead of a summit between Chinese leader Xi Jinping and U.S. President Donald Trump, which is expected to take place next month.

The new restrictions, announced in April, are intended to shield Chinese supply chains from disruption and foreign sanctions. They sharply broaden the very definition of interference in the country’s commercial affairs and impose severe penalties on violators, including exit bans.

“The scope of these regulations extends beyond trade and economics,” the Yuyuan Tantian account, run by China Media Group—the Chinese Communist Party’s media mouthpiece—wrote, describing the measures as merely a “starting point.” “As China continues to refine its legal system in foreign affairs, further legislation should be expected,” the post said. It added that such actions as U.S. threats to impose secondary sanctions on Chinese banks over their role in purchases of Iranian oil, as well as the revocation of Hong Kong-based CK Hutchison’s concessions to operate ports in Panama, create “spillover risks” for Chinese companies.

The emergence of these measures threatens to sharpen tensions just weeks before Trump is due to meet his Chinese counterpart in Beijing, where the two leaders are expected to discuss extending the one-year truce in the trade war. Over the past five years, China has nearly tripled the number of new export controls, formalizing and expanding its retaliatory campaign against Washington’s efforts to contain the country’s technological advance, particularly in semiconductors. In April, Beijing unveiled two new sets of rules—Orders 834 and 835—aimed at protecting supply-chain security and countering attempts by foreign jurisdictions to extend extraterritorial control over Chinese companies, including through sanctions.

These measures form part of a growing web of regulations that allow China to punish companies applying foreign export controls or otherwise cutting the country off from markets and critical imports. The aim is to protect not only those hit directly by foreign actions, but also those at risk of becoming “collateral victims”—or, as the post put it, being “splattered with blood” by decisions made elsewhere.

“In the past, unlawful foreign jurisdiction could penetrate China through intermediaries—businesses, banks, logistics companies, internet platforms,” the Yuyuan Tantian post said. “Now the rule explicitly tells those intermediaries that they cannot act as ‘mouthpieces’ or ‘enforcers.’ In doing so, it undermines the very effectiveness of unlawful foreign jurisdiction—at its source.”

The new rules will most likely intensify friction with China’s trading partners, analysts say, as those partners argue that Beijing is adopting proactive measures rather than merely mirroring steps taken by the United States or Europe.

Yuyuan Tantian added that enforcement of the rules can be calibrated depending on the nature of the foreign move, and that extrajudicial measures from abroad will not automatically trigger retaliation. China has resorted to informal trade coercion before: in 2010, it cut off supplies of rare-earth metals to Japan, materials critical to manufacturing, and later punished Australia by refusing its goods after Canberra called for an independent investigation into the origins of the COVID-19 pandemic.

Some observers believe the laws published in April were drafted long before the onset of the U.S.-Israeli war in Iran, and that it is therefore misleading to tie their emergence directly to that conflict.

Particular concern among multinational corporations has centered on the prospect of sanctions—including the possible detention of their employees working in China during investigations into alleged violations. In a memo, the law firm Morgan Lewis advises multinationals to “reassess risks for senior management” in light of the new rules: “The explicit inclusion of criminal liability and exit bans materially increases the personal risks faced by executives in China.”