China Launches Counteractive Rules to Deal with US Sanctions on China's Stone Enterprises

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On May 2, 2026, the Ministry of Commerce of the People's Republic of China issued Announcement No. 21, officially launching the Rules on the Improper Extraterritorial Application of Anti-Foreign Legislation and Other Measures.

On May 2, 2026, the Ministry of Commerce of China issued Announcement No. 21, officially launching the ''Rules for the Improper Extraterritorial Application of Anti-Foreign Legislation and Other Measures'', which was applied for the first time in specific cases to respond to U.S. sanctions against Chinese petrochemical companies. It clearly requires organizations and individuals in China not to recognize, comply with or implement relevant U.S. sanctions.

Sanctions Background and Involved Enterprises

Enterprises included in the list of specially designated nationals of the United States include Hengli Petrochemical (Dalian Refining and Chemical), Shandong Shouguang Luqing Petrochemical, Shandong Jincheng Petrochemical, Hebei Xinhai Chemical and Shandong Shengxing Chemical, all of which are China's private oil refining and regional independent oil refining enterprises. Among them, Hengli Petrochemical has the largest scale, with an income of about 200.986 billion yuan and a net profit of 7.075 billion yuan in 2025. It has a comprehensive refining capacity of 20 million tons/year and is equipped with paraxylene and polyolefin production units. It is a key enterprise in the private refining industry. In response to the US allegations about Iranian crude oil, Hengli Petrochemical issued a statement at the end of April denying the relevant transactions and said that its operations remained stable.
In addition, U.S. trade restrictions on China's chemical industry continue to increase: in April 2026, the U.S. Department of Commerce issued a final anti-dumping decision on China's imports of MDI. Wanhua Chemical's dumping profit margin was 85.11 percent. Other producers faced higher tax rates, superimposed on existing tariffs, resulting in a significant increase in the cost of exporting to the United States, weakening the competitiveness of products.

Industry Pressure and Countermeasure Significance

The overlap between corporate sanctions and product-level trade remedies shows that external pressures have spread from individual transactions to corporate entities. According to data from the China Council for the Promotion of International Trade, the chemical industry is one of the industries facing higher global trade frictions in 2026, with the United States as the main source.
The launch of the counter-rules provides a formal legal framework for Chinese companies and reflects China's practice of using institutional tools to deal with extraterritorial jurisdiction. The actual impact of the measures will depend on how companies adjust cross-border settlement, trade enforcement and supply chain arrangements. Analysts believe that such targeted countermeasures will help ease tensions while preserving space for follow-up dialogue.

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