China Activates ‘Blocking Rules’ to Shield Petrochemical Firms from U.S. Sanctions
China Issues First-Ever Blocking Order Against U.S. Long-Arm Jurisdiction Ahead of Trump’s Visit
China has taken a decisive step to safeguard its industrial sovereignty, invoking its legal “blocking statute” to neutralise the impact of unilateral U.S. sanctions. In a formal announcement on Saturday, the Ministry of Commerce (MOFCOM) issued a prohibition order targeting recent economic measures imposed by the U.S. Treasury, effectively ordering Chinese entities to ignore Washington’s “long-arm jurisdiction.”
The move follows the U.S. Department of the Treasury’s decision in late April to add five prominent Chinese refining and petrochemical enterprises—including Hengli Petrochemical (Dalian) Refining Co., Ltd., Shandong Shouguang Luqing Petrochemical, and Shandong Jincheng Petrochemical—to the Specially Designated Nationals (SDN) list. The U.S. alleged these firms facilitated the trade of Iranian petroleum, a claim the affected companies and Chinese authorities have categorically denied.
A Shield for National Interests
According to the MOFCOM announcement (Order No. 21 of 2026), the working mechanism for counteracting foreign legislation determined that the U.S. measures meet the criteria for “unjustified extra-territorial application.”
Under the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation, the Chinese government has now mandated that:
Non-Recognition: No individual or entity in China is permitted to recognise or comply with the U.S. sanctions.
Legal Recourse: Impacted companies like Hengli Petrochemical are now legally entitled to sue for compensation in Chinese courts if any party (including banks or insurers) stops providing services to them in compliance with the U.S. order.
Exemption Petitions: Entities finding it impossible to comply with the prohibition due to exceptional circumstances must apply to MOFCOM for a specific waiver.
