Across April and May 2026 a sequence of regulatory developments redrew the operating environment for European companies engaging with Chinese counterparties. The State Council of the People’s Republic of China promulgated two consolidated countermeasures instruments: Order No. 834 of 31 March 2026 (the Supply Chain Provisions, 供应链产业链安全管理条例) and Decree No. 835 of 13 April 2026 (the Counter-Extraterritoriality Regulations, 中华人民共和国反外国不当域外管辖条例); within weeks, the Ministry of Commerce of the People’s Republic of China (MOFCOM) and the Ministry of Justice of the People’s Republic of China (MOJ) each deployed the architecture for the first time. In parallel, the European Union adopted the 20th sanctions package against Russia, the Commission proposed a bespoke exemption to one of its third-country listings, and the Netherlands transmitted the International Sanctions Measures Act (Wet internationale sanctiemaatregelen, the Dutch Sanctions Bill) to the Tweede Kamer and prohibited a United States acquisition of a Dutch information-technology services provider on national security grounds. Taken together, these instruments convert the European operator’s exposure from a conflict of competing public-policy interests into a conflict of competing primary legal obligations, and extend the logic of sanctions enforcement, security screening, and countermeasures to allied as well as adversary jurisdictions.[1]

The Chinese Countermeasures Architecture

The Chinese countermeasures architecture rests on two State Council instruments adopted in spring 2026. The Supply Chain Provisions (Order No. 834) are China’s first dedicated administrative regulation on industrial and supply chain security. Articles 14 and 15 reach respectively foreign states that adopt “discriminatory” supply-chain measures and foreign organisations or individuals causing “substantial harm” to Chinese supply-chain security. Article 16 imposes a mandatory execution obligation on every organisation and individual within Chinese territory, with non-compliance attracting trade and cross-border data-transfer restrictions. Article 13 restricts supply-chain-related information gathering within China, bringing routine compliance, environmental, social, and governance, and human-rights due diligence within reach.[2]

The Counter-Extraterritoriality Regulations (Decree No. 835) elevate to administrative-regulation rank the identification-and-blocking machinery previously contained in MOFCOM’s 2021 Blocking Rules (阻断外国法律与措施不当域外适用办法), reassigning lead identification authority from MOFCOM to the MOJ; MOFCOM retains the Unreliable Entity List (不可靠实体清单) regime and export-control implementation. Article 6 requires the MOJ to assess foreign measures against international law, the connection to the foreign state, the harm to Chinese interests, and a residual category of “other factors”. Three principal instruments follow identification: Article 7 state-level countermeasures; Article 13 prohibition orders (禁执令), with Article 17 penalties for breach; and Article 8 Malicious Entity List designations carrying visa, asset, and transaction consequences and extensible to controlled or affiliated entities. Article 14 confers a private right of action attaching to the act of compliance rather than to the location of the complying party, extending to foreign entities with no operations in China where their compliance with a foreign sanctions designation has injured a Chinese counterparty. Article 4 asserts a Chinese long-arm jurisdiction over conduct with an “appropriate connection” to China, and Articles 8(4) and 17 elevate cross-border data restrictions into a sanctions instrument.[3]

From Architecture to Operation

The architecture moved from text to deployment within three weeks. On 2 May 2026, MOFCOM invoked the 2021 Blocking Rules, which continue at departmental-rule level alongside the Counter-Extraterritoriality Regulations, for the first time in five years, prohibiting the recognition or implementation in China of five OFAC designations against Chinese petrochemical enterprises alleged to have purchased Iranian crude oil under the United States “maximum pressure” campaign. The order reaches Chinese persons and legal persons registered in China (including Chinese subsidiaries of foreign entities) but not foreign citizens within China; non-compliance attracts administrative penalties for Chinese-side persons and exposes any person implementing the underlying OFAC sanctions to Chinese-side civil liability. On 6 May 2026, the Secretary of State, Marco Rubio, confirmed that any entity complying with the blocking order, foreign financial institutions expressly included, would face United States secondary-sanctions exposure. MOFCOM’s earlier decision of 24 April 2026 placing seven European defence and aerospace entities, including FN Herstal, FN Browning, and HENSOLDT, on the Unreliable Entity List, in response to the inclusion of Chinese companies in the 20th sanctions package, indicates that the toolkit is being deployed against the European Union in parallel.[4]

On 15 May 2026, the MOJ deployed the Counter-Extraterritoriality Regulations for the first time, identifying the European Commission’s investigation of Nuctech Co., Ltd. (Nuctech) under the Foreign Subsidies Regulation as an unlawful extraterritorial jurisdiction measure within the meaning of Article 6 and issuing a prohibition order. The operative language names no class of addressees and imposes no territorial limit. The order is best read not as an instrument directed at the Commission, whose institutional incentives leave retreat unlikely, but at the third parties on whose cooperation the investigation depends. The Nuctech investigation has been the subject of the General Court’s consideration in Case T-284/24 R Nuctech Warsaw, and the Chinese identification reads as a symmetric assertion that European measures of this character constitute improper extraterritorial jurisdiction.[5]

The European Union Side: Enforcement-Hardening and Screening

The European side comprises two distinct movements. The first is sanctions-enforcement hardening at the Member State level. The Dutch Sanctions Bill, transmitted to the Tweede Kamer on 19 February 2026 under dossier 36 898, repeals almost the entirety of the Dutch Sanctions Act of 1977 (Sanctiewet 1977) and introduces an administrative-enforcement track parallel to the criminal-law channel under the Economic Offences Act (Wet op de economische delicten). Four sectoral supervisors are named: the Customs Administration (Douane), the Investment Screening Bureau (Bureau Toetsing Investeringen, BTI), the Financial Supervision Office (Bureau Financieel Toezicht), and a designated dean for the legal profession. A single Central Notification Centre Sanctions replaces the dispersed reporting model. The most contested provision is the power of the Minister of Economic Affairs to appoint an undisclosed administrator (stille bewindvoerder) at a Dutch-established company where a sanctions measure jeopardises financial stability or continuity; the Council of State has flagged that the provision sidelines the Goods Availability Act of 1952 (Wet beschikbaarheid goederen, Wbg). The Bill discharges no European Union transposition obligation and is best read as a Member State’s response to a pressure point shared across the Union.[6]

The second movement is in investment screening. The Wbg invocation against Nexperia Holdings B.V. (Nexperia) on 30 September 2025 transferred Wingtech Technology Co., Ltd.’s (闻泰科技股份有限公司, Wingtech) shareholder voting rights to a state-appointed trustee and barred Nexperia from transferring assets, intellectual property, or personnel without ministerial approval; the Minister suspended the order on 19 November 2025 while preserving the information obligation. On 26 May 2026, the Cabinet prohibited the acquisition of Solvinity B.V. (Solvinity), a Dutch information technology services provider that hosts the DigiD authentication system, by Kyndryl, Inc. at a reported transaction value of approximately €100 million, on the recommendation of the BTI and under the Dutch telecommunications-security screening regime. State Secretary Willemijn Aerdts characterised the review as “country-neutral, risk-based, and proportionate.” Taken together, the Nexperia and Solvinity decisions indicate that the screening logic first deployed against a Chinese-controlled counterparty in 2025 is now available against an allied United States acquirer.[7]

Convergence: Three Regimes, One Set of Transactions

The European operator now sits subject to three regimes that, until recently, conflicted as competing public-policy interests and now conflict as competing primary legal obligations. Council Regulation (EU) No 269/2014 prohibits dealings by European Union persons with designated persons; the 20th sanctions package has extended the listing reach to third-country suppliers, a recent illustration being the 23 April 2026 listing of Yangzhou Yangjie Electronic Technology Co., Ltd. (扬州扬杰电子科技股份有限公司) and the Commission’s 22 May 2026 proposal for a time-limited automotive exemption. The European national enforcement and screening architecture constrains the relocation and transfer of assets, intellectual property, personnel, and ownership interests by undertakings established within Member States, on a country-neutral basis. The Chinese countermeasures architecture exposes Chinese subsidiaries of European operators to prohibition orders, Malicious Entity List designations, and Article 14 private litigation. The bind is sharpest where the operator maintains both European Union and Chinese subsidiaries: compliance with the asset freeze is mandatory under articles 2 and 4 of Regulation 269/2014; the same compliance by a Chinese subsidiary on the parent’s direction is potentially exposed to article 9 anti-circumvention analysis and may attract Chinese countermeasures. The Nanjing Maritime Court’s 2025 published judgment, in a tort action against a Swiss subcontractor whose only China nexus was compliance with United States sanctions, confirms that Chinese courts will entertain such claims.[8]

Outlook

Three cross-cutting indicators will set the trajectory. The first is the next Article 6 identification under the Counter-Extraterritoriality Regulations: the MOJ’s 15 May 2026 identification supplies the inaugural data point, and any second identification, in particular one directed at a United States measure, will reveal the discretion the interagency mechanism intends to retain. The second is the fate of the BIS Affiliates Rule, suspended on 10 November 2025 for a phase running to 9 November 2026 following the Trump–Xi truce extension at the Busan meeting of 30 October 2025; reinstatement would supply an obvious candidate for identification. The third is the trajectory of the Dutch Sanctions Bill, in particular the government’s response on the undisclosed-administrator power and the second tranche scheduled after the European Anti-Money Laundering Regulation takes effect on 10 July 2027. The Commission’s 22 May 2026 exemption proposal remains subject to the unanimity requirement of articles 29 TEU and 215 TFEU, and any single Member State can hold it indefinitely.[9]

[1]. Council of the European Union, Russia’s War of Aggression Against Ukraine: 20th Round of Stern EU Sanctions, press release, 23 April 2026; European Commission, Commission Proposes Time-Limited Exemption from the 20th Russia Sanctions Package for Continuity of Supply to the European Automotive Industry, press release, 22 May 2026; Squire Patton Boggs, The 20th EU Sanctions Package Against Russia: Scope, Entry Into Force and Compliance Implications for Operators, alert, April 2026.

[2]. State Council of the People’s Republic of China, Provisions of the State Council on the Security of Industrial Chains and Supply Chains, Order No. 834, adopted 13 March 2026, promulgated 31 March 2026, arts. 3, 7, 8–10, 11, 13, 14–15, 16; Ministry of Justice of the People’s Republic of China, Official Q&A on the Provisions of the State Council on the Security of Industrial Chains and Supply Chains, 7 April 2026; Squire Patton Boggs, China’s New Supply Chain Security Regime — State Council Order No. 834 and Its Implications, alert, April 2026.

[3]. State Council of the People’s Republic of China, Regulations of the People’s Republic of China on Countering Improper Extraterritorial Jurisdiction by Foreign States, Decree No. 835, promulgated 13 April 2026, arts. 4, 6, 7, 8, 8(4), 13, 14, 16, 17; Ministry of Commerce of the People’s Republic of China, Measures on Counteracting Unjustified Extraterritorial Application of Foreign Laws and Measures, Order No. 1 of 2021, 9 January 2021, arts. 4–7; Standing Committee of the National People’s Congress, Anti-Foreign Sanctions Law of the People’s Republic of China, 10 June 2021, art. 12; Squire Patton Boggs, China’s New Countermeasures Regulation: Identification, Blocking and the Malicious Entity List, alert, April 2026.

[4]. United States Secretary of State Marco Rubio, Remarks to the Press, 6 May 2026; Reuters, China Condemns EU’s Inclusion of Chinese Entities in Sanctions Package Against Russia, 25 April 2026; Ministry of Commerce of the People’s Republic of China, decision of 24 April 2026 placing seven European Union defence and aerospace entities on the Unreliable Entity List.

[5]. Ministry of Justice of the People’s Republic of China, prohibition order under the Regulations of the People’s Republic of China on Countering Improper Extraterritorial Jurisdiction by Foreign States, 15 May 2026; Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market [2022] OJ L330/1; Case T-284/24 R Nuctech Warsaw Company Limited v European Commission, Order of the General Court; Squire Patton Boggs, China’s First Prohibition Order Targets the EU Foreign Subsidies Regulation, alert, May 2026.

[6]. Tweede Kamer der Staten-Generaal, Wet internationale sanctiemaatregelen, dossier 36 898, kamerstukken 36 898 nrs. 1–4, 17 February 2026; Afdeling advisering van de Raad van State, Advies inzake het voorstel van wet houdende regels over de uitvoering van internationale sanctiemaatregelen, W02.25.00209/II, 8 December 2025; Mededeling van de Minister van Justitie en Veiligheid van 15 april 2025, Staatscourant 2025, 12900, with appended transposition table; Directive (EU) 2024/1226 of the European Parliament and of the Council of 24 April 2024 [2024] OJ L 2024/1226; Squire Patton Boggs, The Dutch Sanctions Modernisation Bill: A Guide for International Businesses, alert, April 2026.

[7]. Ministry of Economic Affairs (Netherlands), Minister of Economic Affairs Invokes Goods Availability Act, press release, 12 October 2025; Vincent Karremans, Letter to the Parliament on the Latest Developments Concerning Nexperia, 19 November 2025; Cagan Koc and Diederik Baazil, China Puts Export Controls on Nexperia After Dutch Takeover, Bloomberg, 14 October 2025; Cagan Koc, Dutch Block US Takeover of Cloud Services Provider Solvinity, Bloomberg, 26 May 2026; NL Times, Netherlands Blocks US Takeover of DigiD Operator Solvinity over Security Concerns, 26 May 2026; Squire Patton Boggs, A Herring with Sharks’ Teeth: The Dutch Government Blocks a US Investor for National Security Reasons, alert, 27 May 2026.

[8]. Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine [2014] OJ L78/6, arts. 2, 4, 5, 8, 9, 11; Council Decision (CFSP) and Council Implementing Regulation listing Yangzhou Yangjie Electronic Technology Co., Ltd. under the 20th sanctions package, 23 April 2026.

[9]. Bureau of Industry and Security, United States Department of Commerce, Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities, 29 September 2025; Bureau of Industry and Security, One-Year Suspension of Affiliates Rule Expansion, 10 November 2025; Squire Patton Boggs, BIS Issues One-Year Suspension of Affiliates Rule Expansion, alert, November 2025; Al Jazeera, Trump–Xi Meeting in Busan: Key Takeaways from the Summit, 30 October 2025.