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🇮🇩 Indonesia /Economy & Trade

The US-China Tug of Law

From Republika · () Indonesian

Translated from Indonesian and summarized by DistantNews. Read the original for the full story.

At a glance

Analysis Named sources Ongoing story
  • JPMorgan Chase and Citigroup face lawsuits in China totaling about $44 million after freezing a Chinese oil trader’s assets under US sanctions.
  • China has adopted counter-sanctions rules that can restrict companies from complying with US measures in certain circumstances.
  • The expanding legal conflict creates competing obligations for international companies operating between the two powers.

An international bank can now face legal trouble whichever side it obeys. If it freezes a Chinese company’s assets under US sanctions, a Chinese court may sue it for complying with Washington.

That dilemma is no longer hypothetical. JPMorgan Chase and Citigroup face lawsuits in China totaling about $44 million after freezing the assets of a Chinese oil trader targeted by US sanctions. In June, a Chinese court also applied new rules in a case involving a Singaporean company that refused to ship goods to a sanctioned Hong Kong company.

The Economist described the pattern as a “tug of law,” a play on tug of war. Competition between the United States and China has long involved trade, tariffs and technology. It is now spreading through national legal systems, which both countries are using to influence companies and individuals beyond their borders.

The United States has held this kind of reach for years. Economic sanctions and export controls can affect foreign companies dealing with sanctioned countries or entities, partly because of the dollar’s central role, the importance of the US financial system, American technology and the size of the US market. Losing access to those systems can impose heavy costs on international businesses.

Beijing has long condemned that reach as the extraterritorial use of US law. But China is now developing similar tools. In 2018, President Xi Jinping called on officials to use “legal weapons” suited to China’s position as a major power. The arrest of Huawei executive Meng Wanzhou in Canada that year, at the request of the United States in a case linked to Iran sanctions, highlighted the vulnerability of Chinese companies and citizens to US law.

Since 2021, China has strengthened rules to counter foreign sanctions it considers harmful to Chinese interests. Those measures allow Beijing, in certain cases, to prohibit companies from complying with US sanctions. International firms must therefore navigate two legal systems that can demand opposite actions.

tug of law

— The EconomistThe phrase describes the growing legal competition between the United States and China.
About this summary

Originally published by Republika in Indonesian. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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