China’s Anti-Sanctions Rules Raise Human Rights Risks for Global Tech Firms

On 23 March 2025, China’s State Council enacted new provisions under the 2021 Anti-Foreign Sanctions Law, expanding the scope of targetable entities and countermeasures against those China perceives as harming its interests through foreign sanctions. Among other measures, the expanded scope of countermeasures includes the seizure of intellectual property (IP) and the prohibition of export activities; the list of targetable sectors is now explicitly included, encompassing science and technology. These new rules create more significant risks for foreign tech companies with operations in China, which are already vulnerable to pressure to comply with extraterritorial censorship and surveillance demands. The provisions not only strengthen China’s ability to evade accountability but also further threaten freedom of expression in the digital space.

Anti-foreign sanctions law

Enacted in 2021, the Anti-Foreign Sanctions Law is part of a raft of regulations passed that year—such as the Data Security Law, which allows China to retaliate against foreign data regulations. These laws empower China to impose countermeasures against perceived slights. The Anti-Foreign Sanctions aims explicitly to 'preserve national sovereignty, security, and development interests' against what it describes as 'discriminatory restrictive measures.

Article 12 of the law prohibits organizations and individuals within China, including both Chinese and foreign entities, from enforcing or assisting in foreign sanctions, while empowering potentially impacted actors to press for compensation. As Merics noted in 2021, this might have prevented HSBC from cooperating with US investigations into Huawei’s skirting of Iran sanctions. This could also justify reprisal, for example, against companies that refuse to engage with Chinese artificial intelligence (AI) companies SenseTime, Megvii, or Yitu, all on sanctions lists for, among others, their involvement in the techno-authoritarian persecution of Uyghurs in China.

Article 4 of the 2021 law holds that anyone who "directly or indirectly participate[s] in the drafting, decision-making, or implementation" of foreign sanctions shall be entered into a countermeasures list. In addition, Article 6 outlines that additional penalties may include the revocation of visas or deportation, seizure of property within the PRC, prohibition of transactions or cooperation with entities in the PRC, and other measures.

As noted in a Covington legal analysis following its enactment in 2021, the law’s overbroad provisions pose significant challenges for companies operating in China, which may be deemed by authorities to have played any role in enforcing foreign sanctions. It further complicates efforts to navigate compliance with both Chinese and foreign legal regimes.

For example, biomedical company Thermo Fisher has come under mounting scrutiny in recent years for selling DNA identification technology equipment to the Chinese police, which has been used in gross human rights violations against Tibetans and Uyghurs. In 2019 and 2024, respectively, the company announced that it would halt the sale of such technologies in Xinjiang and Tibet. This is emblematic of previous cooperation between foreign tech companies and Chinese actors on sanctions lists, such as the Xinjiang Production and Construction Corps, which would face greater reprisal for compliance with international sanctions imposed against rights abusers. This could also complicate global human rights efforts to hold such companies accountable.

The risks don’t stop there. China could use the threat of countermeasures to increase pressure on companies to comply with censorship of surveillance demands. As I have written elsewhere, business operations in China often already force foreign tech companies to choose between market access and human rights responsibilities.

Enhancing sanctions evasion and countermeasures

The new rules, which have already taken effect, outline 22 provisions that risk supercharging risks to foreign tech companies.

The 2025 rules expand the scope of seizable assets under Article 6 to include intellectual property (IP). The inclusion of IP seizure as a countermeasure should be of particular concern to foreign tech companies. As the US-China Economic and Security Review Commission has found, China uses a variety of methods to facilitate technology transfer. Despite regulatory changes over the past few years, concerns about forced technology transfer persist.

China’s shadowy international influence network, led by the United Front Work Department, is not only involved in information manipulation operations but is also responsible for acquiring foreign technology. One could argue that countering sanctions also serves as an information control objective, as sanctions reinforce negative narratives that China seeks to deflect. Both countering sanctions and acquiring intellectual property could be seen as United Front priorities.

The heightened risk for tech companies is emphasized by the new rules, which explicitly identify the science and technology sector, among others, as those with whom China may prohibit or restrict cooperation and other activities as part of its countermeasures. While this primarily means it may restrict targeted foreign actors from engaging with Chinese technology firms, which would introduce significant challenges in the case of joint ventures—often a requirement for market access—it is also a reminder that foreign tech companies, too, are in the crosshairs.

Potentially targeting foreign tech companies accused of involvement in the ‘drafting, decision-making, or implementation’ of foreign sanctions exposes them to considerable risk and potential compliance with human rights-abusive demands. This is especially true considering overbroad interpretation of the law which could allow China to determine that the refusal to invest in or enter partnership with Chinese tech companies sanctioned for their role in human rights violations or not to supply certain technologies that could be used for such purposes is tantamount to complicity in the implementation of sanctions.

Enhanced countermeasures that include the seizure of intellectual property (IP) might be of particular concern for companies like Microsoft, which operates an advanced research lab in Beijing that has become one of the world's most significant AI labs in recent years. Microsoft has claimed it has guardrails in place, but what happens if the company falls afoul of China, for example, for failing to comply with US sanctions regarding software or semiconductor restrictions? Because some of the sanctioned Chinese entities in this regard are not only located in China but also in places like South Korea or Singapore, navigating such restrictions is no easy task.

Apple and Tesla could also face heightened risks under new countermeasures. Both companies make significant revenue through production and sales in China, making them more vulnerable. This is true even though Tesla's sales there are deteriorating, as they are elsewhere in the world, in response to Musk’s political stance, and as BYD outperforms in the electric vehicle (EV) market. Still, Tesla has reportedly been developing plans for a data center in China, where it would train algorithms for its autonomous vehicle development. This could relate to other entities in Elon Musk’s business empire, such as Starlink, especially if Chinese satellite infrastructure providers face targeted sanctions that are determined to benefit Starlink.

But China could also use the threat of countermeasures to pressure tech companies into greater compliance with censorship or surveillance demands. For example, ARTICLE 19 has previously raised concerns with Apple’s compliance with censorship and surveillance pressure from China. If the company is accused of complying with the implementation of sanctions against China elsewhere, this could lead to further pressure to comply with restrictions on freedom of expression, or face seizure of intellectual property or restrictions on exporting Apple devices out of China.

Conclusion

China has increasingly sought ways to evade accountability mechanisms such as sanctions imposed in response to its widespread and systematic human rights violations. It has lobbied at the UN, including at the Human Rights Council, to spin the narrative in its favor. While targeted sanctions are widely recognized as a legitimate accountability tool, China has reframed them as unilateral coercive measures that infringe on its rights, a stance reflected in the highly questionable recent country visit of a UN Special Rapporteur on the topic.

The new rules compound the challenges foreign companies face in navigating complex business operations in China while upholding the UN Guiding Principles on Business and Human Rights (UNGPs). They not only expand China’s tools for undermining international accountability mechanisms but also introduce new tactics to pressure foreign companies into complying with rights-restricting measures or turning a blind eye, as China seeks to reorient global digital governance norms. For many tech companies, this heightened risk could intensify pressures to comply with demands for censorship or surveillance. Foreign tech companies operating in China must consider these new rules in their human rights due diligence processes.

Ultimately, the new rules should give foreign tech companies serious cause for alarm in ongoing business operations in China.