ANNOUNCEMENT 19 Sep 2020

September 19th, 2020 - The Chinese ministry of finance announced a new policy that can specifically block foreign firms from operating in the nation.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

PRC Ministry of Finance, September 19th, 2020. (商务部令2020年第4号 不可靠实体清单规定)
http://www.mofcom.gov.cn/article/b/fwzl/202009/20200903002593.shtml

English version:
http://english.mofcom.gov.cn/article/policyrelease/questions/202009/20200903002580.shtml

Inception date: 19 Sep 2020 | Removal date: open ended

FDI: Treatment and operations, nes

On September 19th, 2020, the Chinese Ministry of Finance released Order 2020/4 (hereafter, 'Order'), which stated the provisions relating to the 'Unreliable Entity List' first announced in May 2019.

The Order stated that foreign firms who already operate or seek to operate in the PRC may have their business effectively frozen through fines, deportation of personnel, prohibition of import/exports, or simply, 'other necessary measures'.

These measures may be imposed on firms for one of two listed reasons: (1) endangerment of national security or (2) a firm that 'violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the enterprise, other organization, or individual of China'.

Specifically, the measures can be applied to any foreign 'entity' - defined as an 'enterprise, organisation, or other individual of a foreign country'.

The list itself is at the time of writing (the day of promulgation) yet to be published. The Order states that it shall become effective immediately.

Consistent media reports support the idea that the Order comes as an answer to a US decision to ban any 'transactions' done through WeChat or ByteDance's TikTok (both Chinese owned operations) in the country. The Order was also released a few days after this ban was confirmed - please see related act for more information on this.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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