U.S. Sanctions Chinese Governmental Entity and Officials – China Retaliates

July 13, 2020

On July 9, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a Chinese governmental entity and four current or former governmental officials in connection with alleged human rights abuses against the Uyghur and other ethnic minorities in the Xinjiang region of western China. On July 13, 2020, the Chinese Government retaliated, reportedly sanctioning several U.S. lawmakers and barring their entry into China, among other potential restrictions.

OFAC’s designations on July 9 were made pursuant to Executive Order 13818, which implemented the Global Magnitsky Human Rights Accountability Act (Global Magnitsky Act). Notably, the U.S. has not yet established a separate sanctions program relating to China, and instead chose to seek sanctions under the Global Magnitsky Act, which permits OFAC to sanction entities and individuals responsible for, complicit in, or otherwise engaging in serious human rights abuses. The U.S. Departments of State, Treasury, Commerce, and Homeland Security had previously jointly issued a Supply Chain Business Advisory to highlight the risks for businesses with supply chain exposure to entities engaged in human rights abuses in the Xinjiang region of China.

Relatedly, on July 1, 2020, the U.S. Congress passed the Hong Kong Autonomy Act, which now goes to the President’s desk for signature. The Hong Kong Autonomy Act, if signed into law, would authorize the U.S. government to sanction foreign persons that materially contribute to the failure of the Government of China to meet its obligations relating to Hong Kong’s autonomy (e.g., the Joint Declaration and the Basic Law). In addition, the Hong Kong Autonomy Act authorizes the U.S. government to sanction foreign financial institutions that engage in significant transactions with foreign persons determined to contravene the obligations of China as it relates to Hong Kong’s autonomy.

China has strongly objected to the U.S.’s sanctions and has threatened further retaliation. We will continue to closely monitor developments in this space.  If you have any questions or concerns about U.S. sanctions, please contact Bruce G. Paulsen (212-574-1533), Andrew S. Jacobson (212-574-1477), or Noah S. Czarny (212-574-1642) at Seward & Kissel’s Sanctions Practice Group.