Marco Rubio’s May 2026 visit to China surprised observers since he was officially sanctioned by Beijing. Yet he entered without obstruction after the first syllable of his Chinese surname, “Lu,” was quietly altered. Beijing insisted the sanctions targeted Rubio’s past rhetoric, not his current role as Secretary of State. The episode shows that China’s anti‑sanctions regime functions less as a rigid legal system than as a flexible instrument of economic statecraft. Rubio’s case reflects a broader pattern of strategic ambiguity in China’s anti‑sanctions and counter‑measures framework. The same logic is embedded in the 2021 Rules on Counteracting Unlawful Exterritorial Application of Foreign Legislation and Other Measures (阻断外国法律与措施不当域外适用办法) (“Countering Measures”). Despite sweeping language, the rules rely on civil litigation, vague criteria, and selective enforcement, suggesting a system designed for political signalling rather than consistent legal application.
Countering Measures & Ambiguity
In May 2026, the Ministry of Commerce first invoked the Countering Measures to prohibit enterprises in China from complying with US Iran-related sanctions on five Chinese enterprises, including Hengli Petrochemical (Dalian) Refining Co., Ltd. Yet, China’s financial regulator reportedly still asked Chinese banks to temporarily suspend new loans and review business relationships with the refinery. Beijing appeared to balance defiance toward Washington with the need to shield its banks from secondary sanctions, revealing the limits of the measures.
Counterparties exposed to US secondary sanctions would likely choose to reduce or suspend dealings with Hengli. For example, banks may review existing loan arrangements, transaction services, or trading facilities, and in some cases may even terminate banking relationships. Under the Countering Measures, Beijing could retaliate and Hengli could sue counterparties for losses caused by compliance with US sanctions. Yet neither the government nor Hengli has taken further action. The case illustrates that Beijing’s objective is not necessarily to compel compliance, but to preserve political discretion.
The same enforcement logic extends across China’s broader anti-sanctions framework, including the Anti-Foreign Sanctions Law (AFSL). Rather than proactively punishing foreign institutions, Beijing has shifted much of the burden of enforcement to private parties and domestic courts through civil tort actions.
In 2023, a Chinese marine engineering company on the Specially Designated Nationals and Blocked Persons List sued a foreign equipment supplier for failing to pay an outstanding instalment after the plaintiff was sanctioned. The Nanjing Maritime Court froze the foreign company’s vessel in China. With US Office of Foreign Assets Control (OFAC) approval, the defendant later paid a USD 13.8 million counter-guarantee, which was transferred to the plaintiff in November 2024. A similar logic appears in litigation between Nexperia and Yuching Holding Limited, where Nexperia was ordered to pay CNY 8 billion in estimated damages and costs due to compliance with sanctions.
Enforcement Against Commercialism
These cases show the passivity of China’s framework, especially compared with US sanctions enforcement. Agencies such as OFAC and the Department of Justice (DOJ) proactively investigate violations under laws including the International Emergency Economic Powers Act and the USA Patriot Act. Violators may face civil and criminal liability, multi-billion-dollar penalties, frozen assets, or exclusion from the global financial system. In the US model, the state is the primary enforcer and compliance is non-negotiable.
Beijing’s countering measures operate differently. Its sanctions-related laws do not clearly codify penalties for violations, and cases are handled selectively. Instead of initiating prosecutions, the state often leaves private entities to execute the law through commercial claims. For foreign boards and institutional investors, this looseness is not simply a relief; it converts sovereign disputes into unpredictable commercial litigation. Geopolitical risks are shifted from state-to-state confrontation into boardrooms, compliance departments and commercial courts.
Why would Beijing choose such ambiguity? The answer lies in global economic interdependence. Over 80% of global foreign‑exchange transactions involve the US dollar, while the renminbi (CNY) accounts for less than 4% of cross‑border payments. For multinational firms operating in China, access to dollar clearing, US financial markets, and global banking networks is commercially indispensable. Strategic ambiguity lets Beijing project resolve while limiting the economic costs of strict enforcement. If China copied Washington’s aggressive sanctions model, foreign firms operating in China would face a stark choice between Chinese anti-sanctions and US secondary sanctions. Most would choose the US system, not out of loyalty, but because access to dollar clearing, the American market, and global finance remains commercially indispensable.
Defensive Statecraft
Given China’s continued reliance on export-oriented industries, multinational supply chains, and foreign direct investment, such an approach could trigger capital flight, disrupt supply chains, and weaken access to export markets—inflicting more damage on China’s own economy than on its geopolitical rivals. Strategic ambiguity is, therefore, a calculated compromise: defensive statecraft that signals defiance without undermining China’s integration into the global economy.
China’s anti-sanctions framework therefore appears designed to maximise symbolic deterrence rather than operational effectiveness. By delegating lawfare to private lawsuits and keeping regulatory criteria vague, Beijing creates uncertainty for compliance officers while avoiding systemic financial decoupling. This symbolic posture is also reflected in the profile of Beijing’s targets: foreign officials, politicians, business figures, and niche companies with limited commercial exposure to China.
This calculated looseness gives Beijing leverage. As Rubio’s frictionless “Lu” diplomacy shows, China’s sanctions are neither an unbreakable legal wall nor an automatic escalation mechanism. They are elastic political instruments designed to exploit uncertainty under interdependence. For multinationals in China, the core risk is not predictable legal punishment, but unpredictable political discretion. Its effectiveness lies less in coercive enforcement than in preserving political flexibility under conditions of economic interdependence.
Cheri Pong is a Hong Kong–based analyst specialising in international political economy, sanctions policy, and great-power competition. She holds an MPhil in Political Science and writes on economic statecraft, financial coercion, and the strategic competition between China and the United States.
This article is published under a Creative Commons License and may be republished with attribution.
