China to implement revised Foreign Trade Law tomorrow… codifies anti-sanctions measures

China will implement its Foreign Trade Law, fully revised for the first time in more than two decades, from the first day of next month.

According to Chinese business outlets including Yicai on the 28th, the revised Foreign Trade Law, passed by the Standing Committee of the National People’s Congress on December 27 last year, will take effect on March 1. The Foreign Trade Law was promulgated in 1994 and first underwent a full revision in 2004. Partial revisions were made in 2016 and 2022.

The revision’s core is seen as elevating foreign trade from a mere market-economic activity to a national strategy amid intensifying competition for technological supremacy and a deepening reshaping of global supply chains, enabling the government to respond. The amendment—comprising 11 chapters and 83 articles—codifies provisions allowing China to take measures in the event of diplomatic friction or trade disputes, thereby creating a rationale to argue that sanctions against counterpart countries are based on domestic law.

However, concerns are also being raised that, because the scope of “corresponding measures” is not defined in detail, it could be applied broadly even to ultra-stringent steps that go beyond international practice.

Another notable feature is the expanded concept of national security. Previously, it was common to restrict exports of strategic materials in situations involving traditional security threats such as military threats, but the revision also defines cases of serious infringement of interests that hinder national development as falling within the scope of security threats.

Observers say this could be interpreted as allowing China—having controlled exports of key resources such as rare earths during the U.S.-China trade war and periods of diplomatic friction with Japan—to take more proactive measures if it judges that its development is being obstructed.

As China seeks to cement its edge in areas such as artificial intelligence (AI) and electric vehicles, there are calls that South Korea should also prepare for disruptions across supply chains for advanced industries as well as for key strategic resources.

Meanwhile, amid criticism that the World Trade Organization (WTO)’s mediation function is weakening, China has also introduced its own trade adjustment assistance system. Through the revision, the Chinese government established a legal basis to support domestic companies harmed in foreign trade relations, enabling it to provide tax benefits or fiscal support.

Reporter Shin Yong-hyun, Hankyung.com yonghyun@hankyung.com