Understanding China’s anti-foreign sanctions law: what Canadian companies need to know

As geopolitical tensions continue to shape global trade and investment dynamics, Canadian businesses operating in or with China must remain vigilant regarding the evolving scope of China’s Anti-Foreign Sanctions Law (AFSL).

Originally enacted on June 10, 2021, the AFSL allows Chinese authorities to impose retaliatory sanctions on individuals, organizations, and governments perceived to support or implement discriminatory measures against China’s sovereignty, security, or development interests.

On March 23, 2025, China significantly expanded this framework by issuing the “Provisions on the Implementation of the Anti-Foreign Sanctions Law.” These new rules (effective immediately): 

• enhance enforcement capabilities
• formalize investigative powers
• introduce non-economic penalties

The AFSL is a legal tool created to counter foreign sanctions that target Chinese citizens, companies, or state interests. It was introduced in response to an increasing number of sanctions imposed against China over issues like human rights, trade practices, and national security. Unlike most Chinese trade-related regulations, the AFSL is administered by the Ministry of Foreign Affairs.

Under the Anti-Foreign Sanctions Law (AFSL), Chinese authorities can impose countermeasures on a broad range of foreign individuals, organizations, and institutions. 

Targets may include:

• those directly involved in or responsible for implementing foreign sanctions or discriminatory actions against Chinese citizens or entities
• entities affiliated with or supporting sanctioned individuals or organizations
• spouses and direct relatives of designated individuals

Sanctions can also be triggered by broader actions that China deems harmful to its national interests, including:

• supporting or facilitating foreign sanctions against Chinese entities
• interfering in China’s internal affairs (such as issues related to Hong Kong, Taiwan, or Xinjiang)
• undermining China’s sovereignty, security, or development goals

Notably, the law now treats foreign judicial decisions and enforcement measures as legitimate grounds for retaliation. This means that legal rulings or actions taken abroad—even those issued by independent courts—can result in sanctions from China if they are perceived to adversely affect Chinese interests.

The list of countermeasures has been expanded well beyond commercial or financial penalties. They now include:

• visa denials
• entry bans
• deportation
• visa cancellations
• asset freezes
• property seizures
• investments bans
• export prohibitions
• restrictions on data transfer
• prohibitions on cooperation in sectors such as:
  • education and research
  • law and legal services
  • environmental initiatives
  • culture and entertainment
  • health, tourism, and sports
  • trade and technology

Authorities are now explicitly empowered to:

• conduct investigations and interviews with sanctioned entities or their affiliates
• request information and records
• enforce compliance through administrative penalties

This introduces new reputational and legal risks for foreign nationals present in China.

Multiple Chinese agencies will now coordinate the enforcement of AFSL provisions. Each has defined responsibilities in listing sanctioned individuals/entities, executing investigations, conducting cross-departmental information sharing, engaging with foreign governments. The Ministry of Foreign Affairs retains central authority, but execution will be decentralized and potentially more proactive than in the past.

Chinese citizens and companies affected by foreign sanctions may seek injunctions or compensation through Chinese courts. Sanctioned foreign individuals or entities may apply to suspend or cancel countermeasures if they can demonstrate corrective action, changes in policy and cessation of involvement in the triggering behavior.