China's Foreign Relations Law has been characterized as a response to Western sanctions and gives China the authority to take countermeasures when faced with threats to national security. Months after the law has come into force, it is bound to have strong implications for business enterprises and foreign entities dealing with the country.
In the international political system, perception is everything. States go out of their way to create a favorable perception of themselves in order to reap the benefits of the international community. However, there is one thing that may even be more prominent than the international perceptions states create and that is, national security. This era of multipolarity is marked by increasing mistrust and a lack of cooperative mechanisms as emerging states attempt to advance their own national agendas and aspirations in the international arena. Needless to say, some states would also adopt a more aggressive approach to realizing these aspirations and by some states, we majorly mean China.
China is the economic giant of the developing world, standing head to head with the United States who once enjoyed the position of the sole hegemon of the world. With China’s revisionist outlook constantly emboldened by its economic position in the international system coupled with its developing military strength, it has become the next major opponent to the United States. China believes that by taking on the West and becoming the voice of the East, the country is destined to right a historic wrong brought about after the ‘century of humiliation’ and take back its rightful position as the hegemon.
There are many caveats to this and the road to becoming a global hegemon is not an easy one. What China has been recently struggling with is the arrival of new and equally capable powers in the global arena that are serving as hurdles for the country on its way to global domination. From China’s point of view in this case, it becomes important to manage its interactions with the states so as to also protect its national integrity and security. The sole reason for this is to not let the emerging new powers and the old powers jeopardize the national goal.
So how does China plan to protect its goals from being compromised through interactions and sanctions with the international system? The Foreign Relations Law.
The Foreign Relations Act came into effect as a legislation on the 1st of July 2023. This law, in all simplicity, governs that the foreign interactions of China and the foreign policy are going to be under the ambit of the Chinese constitutional constraints. The central idea of the law is to protect Chinese interests even in the face of disagreements and tussles with foreign actors, especially in the case of sanctions imposed by the United States.
The law bestows the Chinese government with the authority to take restrictive and countermeasures against the individuals, organizations or foreign actors that are deemed to be hurting the Chinese national interests and thus stand in violation of the law. The law also mandates that the treaties or agreements the Chinese government enters into should not be in violation of the provisions of the Chinese constitution This places the importance of the Chinese constitution even above the international legal system and customary obligations. In the words of Wang Yi, the Foreign Minister of the People’s Republic of China, the law is China’s “tool to fight against the actions of protectionism, unilateralism and bullying at the hands of foreign powers.” While China has been propagating the tenets of national interests, security and national integrity in the context of interaction with foreign actors for quite some decades, this can be considered as the first step towards legalizing the measures undertaken to implement the constitution. More importantly, it gives the Chinese state the power to act in accordance with the law as and how it deems fit. In doing this, China is also not defining the scope of the activities that can be considered opposing the national interests of the country, this is a strategic move to increase the chances of using the state’s discretion in imposing the law on foreign entities.
Another significant aspect of this law is regarding strengthening the Chinese laws and regulations in accordance with international laws and the norms for international relations, in the context of the ‘foreign-related fields’. The ‘foreign-related fields’ here refer to the extraterritorial applications of Chinese laws and their enforcement. China has had a history of passing laws that also extend extraterritorially which means, extending beyond the borders of China and the Foreign Relations Law is one such legislation. This increases the scope of the application beyond China’s territory itself and takes into account the activities of the entities or individuals that occur outside the country as well, especially if the Chinese leadership presumes that the activities will have an impact on China’s interests. What is interesting to note here is the careful consideration of ‘international laws and norms’ that detail that China will comply with the international norms and rules of law.
At a time when the whole world has become wary of China and its aggressive diplomatic stance in international relations, the Foreign Relations Law has provided the “legal” toolkit, as Foreign Minister Wang Yi calls it, for the Chinese government to enhance its control over foreign policy. China was leading up to this law through the Anti-Sanctions law and the amendment of the Anti-Espionage law. So this has also been deemed as the ‘umbrella legislation’ that covers all the areas of foreign policy and China’s interactions with the international community.
The main impact of this law will be borne by the companies, both Chinese and foreign entities working within China and abroad. It empowers China to take legal action against foreign companies if it deems that their activities contradict the national interests of the country. These organizations, individuals and entities are now put under legal obligations to protect the national interests, sovereignty, security, dignity and honor of the Chinese state.
It may be interesting to understand why China chose to develop such a legislation at this point in time and the reason for this is simple, China is responding to the perceived threats it believes that the country is facing. The seeds of this action were laid back when Huawei came under international scrutiny a few years ago and China is now in a position to develop its own law that extends its judicial control overseas thereby also countering the legal actions taken by the West, especially the US in targeting Chinese establishments.
It has been over two months since the enactment of this law and the repercussions of this are yet to play out in the open. However, one can predict that the Foreign Relations Law of China will make it difficult for foreign companies and businesses to invest in Chinese resources and enter into contracts with the Chinese companies themselves. These companies will have a whole rule book of Chinese obligations to consider and comply with as they enter into partnerships with Chinese actors. This law has placed the Chinese Communist Party at the helm of all aspects of foreign policy and relations with foreign entities with extraterritorial control. If this will create more problems than solutions for China, is for us to see but this development is bound to make matters more complicated for foreign actors and businesses operating within China or in partnership with Chinese firms.