On 26 December 2023, China’s Ministry of Foreign Affairs announced new sanctions measures under the Anti-Foreign Sanctions Law against the following parties for their involvement in the imposition of US restrictive measures on Chinese entities over their links to alleged human rights abuses in the Xinjiang Uygur Autonomous Region:

  1. US data intelligence firm, Kharon;
  2. Edmund Xu, research director of Kharon; and
  3. Nicole Morgret, a former human rights analyst at the Centre for Advanced Defence Studies.

The sanctioned parties are prohibited from entering China (including mainland and the Hong Kong and Macao Special Administrative regions). In addition, all properties (including movable and immovable properties) owned by these parties are frozen, and all Chinese entities and persons are prohibited from transacting and cooperating with these sanctioned parties.

Data intelligence tools and services offered by service providers such as Kharon are extensively utilized by multinationals in conducting due diligence, such as military end use / end user screening, for trade compliance purposes. The new sanctions will create new complexities for multinational corporations’ trade due diligence efforts to comply with non-Chinese trade regimes, while navigating local sensitivities and legal restrictions in China.

This development reinforces the need to embrace an holistic approach, taking into consideration all applicable legal regimes, for handling trade due diligence in China.

Frank Pan is a partner of FenXun Partners who is a premier Chinese law firm. FenXun established a Joint Operation Office with Baker McKenzie in China as Baker McKenzie FenXun which was approved by the Shanghai Justice Bureau in 2015.