China vows to improve anti-sanctions measures in financial law

CHINA’S Vice-Premier He Lifeng said that Beijing will embed anti-sanctions provisions into its financial laws, vowing to counter what he called unreasonable foreign suppression.

Speaking at a Shanghai forum on Wednesday (Jun 17), He underscored explicit provisions in a draft financial law to block and counter “improper unilateral sanctions”. Without naming any country, He said that authorities would push to add similar blocking and countermeasures into other financial legislation, expanding what he called China’s “financial legal toolbox”.

“We have never proactively provoked friction or manufactured confrontation with other countries,” He said. “But we are not afraid of trouble, we will never back down in the face of unreasonable suppression and containment.”

He was among China’s top policymakers who took the stage on Wednesday morning at the annual Lujiazui Forum, which brings together global finance executives and the nation’s top regulators. This year’s slate of speakers includes securities regulator Wu Qing and foreign exchange regulator Zhu Hexin.

Central bank governor Pan Gongsheng signalled a potential shift in its interest rate framework with a focus on the overnight policy rate, a move that would bring it more in line with global peers.

Ding Xiangqun, in her first major public appearance after becoming the head of the National Financial Regulatory Administration this month, used her earlier speech to lay out an agenda that ranged from resolving risks at small and medium-sized banks to setting rules in digital finance.

The comments by the vice-premier underscore how Beijing is hardening its legal defences against foreign economic pressure.

China issued its first-ever blocking order in May, forbidding domestic entities from complying with US sanctions on Chinese refineries linked to Iranian oil trade. The month before, the State Council rolled out new rules to counter what the government calls “improper extraterritorial jurisdiction by foreign countries”.

A draft of the nation’s first overarching financial law, released for public comment in March, provides the legislative backbone for that push.

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Article 85 of the draft would grant China the right to impose countermeasures against any country that takes “discriminatory prohibitions or restrictions” against Chinese citizens or organisations in the financial sector, and to sanction nations whose actions are deemed to endanger China’s financial security.

The high-profile forum comes a day after China released data showing the world’s second-largest economy slumped in May, with consumer spending and investment falling to levels unseen since the pandemic. The figures highlight entrenched weaknesses, even as booming exports and easing geopolitical tensions around Iran offer a temporary buffer.

Technology is poised to be a hot topic during the two-day event, particularly as China prepares to invest roughly two trillion yuan (S$379 billion) over the next five years to build out its nationwide data centre network, Bloomberg reported earlier.

The gathering also coincides with the biggest shake-up of China’s cross-border tax system in decades. Authorities have threatened three popular brokers with at least US$330 million in penalties, vowed stricter controls for banks and quietly ramped up pressure on the country’s richest people and the vehicles they use to hold overseas assets. BLOOMBERG