To counteract efforts by the US and its allies to curb technological development in China, Beijing enacted a new foreign relations law. As a response to US sanctions and “de-risking” measures targeting Chinese suppliers, the new Chinese law codifies countermeasures against acts that “endanger China’s sovereignty, security and development interests.” President Xi stressed again that the US must not deprive China of its “legitimate right to development” at a recent meeting with Secretary Blinken. This law follows recent retaliatory sanctions imposed by Beijing on US firms such as Lockheed Martin, Raytheon, and Micron, and it is said to enshrine the Communist Party’s absolute control over China’s international relations and related decision-making.
The new law demonstrates the CCP’s determination to counter attempts by other countries to restrict the growth of China’s economic and military power. It also reinforces that China’s foreign policy will first and foremost align with Xi Jinping’s priorities, further consolidating the Party’s command over the state’s external affairs and demonstrating the centralization of power under Xi. It is yet to be seen whether foreign companies will be deterred from continuing to do business in both China and Hong Kong out of fear of the Party’s expansion of laws, like this one, that may affect multinational corporations. Reflecting broader changes in the Chinese legal system, new regulations increasingly allow the Party to take legal action on national security grounds rather than economic ones, which may pose significant risks for foreign businesses.