China made its move on May 2. The Ministry of Commerce issued an announcement built around a nine-character directive — “不承認、不執行、不遵守“ （not to be recognised, not to be enforced, not to be complied with”） — in response to the US decision to place five Chinese companies on the Iran-related SDN list. On the surface, this “Blocking Order” is a legal document; in substance, an asymmetric strike at a soft spot in the US sanctions system. It shows how the strategic contest has moved beyond tariffs and technology into the less visible arena of law, finance and rule-making.
Start with the force of US long-arm jurisdiction. Washington does not need to personally choke off every transaction; by leaning on the US dollar clearing system and the global financial network, it can place a target on the SDN list and push banks, insurers and shipping firms worldwide to cut ties out of fear of compliance risk. A low-cost precision strike built on one brutal logic: America designates, and the world follows.
China’s tactical brilliance lies in changing the cost formula rather than striking the US government head-on. By invoking the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures, Beijing denies the effect of the relevant US sanctions within China’s legal order.
More importantly, Article 9 gives harmed Chinese parties the right to sue in Chinese courts and seek compensation from any person or organisation that injures their lawful interests by complying with a blocked foreign law.
That changes the calculation for multinational banks and shipping companies. In the past, once an entity landed on the SDN list, the safest move was to terminate services and absorb only US compliance risk; now those firms must also consider the risk of civil damages in China if they cancel contracts with a sanctioned Chinese company solely in the name of complying with US sanctions. The cost of sanctions is no longer borne by Chinese companies alone; it is shared with, and may even be pushed back onto, the third parties trying to enforce them.
The second edge of this “trump card”: precision. It does not aim at the brain of the US sanctions system — the decision-making bodies — but at the neural network and capillary circulation that keep it alive: the third-party intermediaries that sit at critical junctions of global commerce.
Take the sanctioned Chinese refining companies. Their real problem is often not production itself, but the risk of becoming commercial islands after losing access to financial settlement, cargo insurance, vessel chartering and similar services. The “Blocking Order” is designed to build a legal firewall around them inside China, protecting their channels for RMB financing, supply-chain cooperation and judicial relief, while telling multinationals operating in China or doing close business with it that improper foreign extraterritorial sanctions cannot be treated as a self-evident excuse to damage the lawful interests of Chinese parties.
That puts the key nodes of the global commercial network under real strain. Multinationals that neither want to offend Washington nor can afford to leave the Chinese market can no longer execute US directives mechanically; they must weigh the risk of losing US dollar access against the risk of losing the Chinese market and facing Chinese legal liability. The result is more friction and more uncertainty for the US sanctions machine, turning what was once a low-cost, high-efficiency weapon into a double-edged sword that can trigger legal conflict and commercial blowback.
Can other countries do the same? Probably not easily, because the country with both the capability and the nerve to make this move is, in all likelihood, China. Any legal instrument draws its real force from the national power behind it, and China’s “Blocking Order” rests on the support of a strong real economy, complete industrial chains and a vast market.
China is the world’s largest trader in goods, its most important manufacturing hub and one of the consumer markets with the greatest growth potential. For many multinationals, revenue and market share in China are central to their global strategy, so if complying with US sanctions brings legal risk, commercial losses or even barriers to market access in China, the balance of corporate decision-making inevitably starts to shift. The logic is the same as in the trade war: China’s countermeasures work by turning unilateral US pressure into real costs that US companies, supply chains and consumers must bear.
The “Blocking Order” carries that logic into the legal and financial arena. It shows that China can do more than retaliate in goods trade; it is now using domestic law and market leverage in a more systematic way to push back against US dominance in areas such as financial compliance. The growth of the Cross-Border Interbank Payment System, or CIPS, and the continued opening of China’s financial markets are giving this kind of legal tool a firmer infrastructure base.
The first “Blocking Order” signals a new phase in Sino-US competition. The contest is moving from direct clashes of hard power into a deeper struggle over rules, institutional strength and soft power, marking China’s counter-sanctions framework moving from institutional reserve to real-world operation, and from passive defence to more active rule-setting.
The force of this non-kinetic weapon does not lie in instantly destroying anything. Its strength lies in changing the rules of the game and increasing the cost and complexity of using the other side’s preferred tools. It may not force the United States to abandon sanctions at once, but it ensures that every new designation must now account for the chain reactions and counter-blows it could unleash. For China, which is determined to defend its development interests and challenge unilateralist hegemony, that makes this a pivotal move with both offensive and defensive value in a complex strategic contest.
Future rivalry between major powers will increasingly play out on this invisible battlefield of shaping rules, defining compliance and influencing global commercial expectations. China’s “Blocking Order” is a heavyweight piece placed squarely on that new board.
East Stratos
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