China Releases New Trade Regulations to Counter Foreign Sanctions and Extraterritorial Laws

Apr 21, 2026

China released new trade regulations designed to counter what it calls 'unjustified' extraterritorial application of foreign laws, explicitly warning the European Union of reciprocal measures if EU cybersecurity regulations penalize Chinese firms. China's commerce ministry submitted a 30-page document to the European Commission on Friday, threatening retaliation if companies like Huawei and ZTE face penalties under the EU's proposed cybersecurity law announced in January. China frames these regulations as a 'legal shield' against external pressure, with the move coming amid broader geopolitical tensions including the Iran war and a Panama port dispute. The regulations represent an escalation in trade tensions between China and the EU over technology security concerns.

China's Warning of Reciprocal Measures Against EU Firms

▪China warned that Beijing will hit EU firms with reciprocal measures if the EU targets Chinese firms under its proposed cybersecurity regulations.
▪China's commerce ministry submitted a 30-page document to the European Commission on Friday.
▪China's commerce ministry explicitly warned that broad retaliation was on the table if firms such as Huawei and ZTE were penalised by EU cybersecurity law.

EU's Proposed Cybersecurity Regulations Targeting Chinese Companies

▪The EU's proposed cybersecurity regulations plan to target Chinese firms including Huawei and ZTE.

Perspective of China

▪China's new trade regulations are designed to counter foreign sanctions and extraterritorial laws.
▪China positions its regulatory response as connected to the Iran war and Panama port dispute contexts.
▪China views its new trade regulations as a 'legal shield' against external pressure.
▪China characterizes extraterritorial use of foreign laws as 'unjustified' in the context of its new trade regulations.

Perspective of European Union

▪The European Union's proposed cybersecurity regulations are still in draft form as of the announcement in January.
▪The European Union frames its cybersecurity regulations as necessary security measures rather than discriminatory trade barriers.