China defies US sanctions: Beijing orders firms to ignore Washington’s bans

China defies US sanctions with new blocking order

Beijing issued a sweeping directive on Saturday instructing domestic firms to disregard U.S. sanctions targeting private refiners linked to Iran’s oil trade, marking an unprecedented escalation in the rivalry between the world’s two largest economies. The order, published on the People’s Daily app, frames the move as a legal counter to what officials call Washington’s “long‑arm jurisdiction.”

Hengli Petrochemical, a Dalian‑based refinery sanctioned last month, is among the companies expressly protected. The state‑run block aims to neutralize asset freezes and transaction bans, allowing Chinese banks to continue financing the sector.

“They want as many levers as possible,” said Ja Ian Chong, associate professor at the National University of Singapore.

Financial analysts note that Hengli’s parent projected ↑ 235 bn CNY in credit lines this year, a figure that would be jeopardized if U.S. secondary sanctions were applied to its lenders. Banking institutions are now scrambling for guidance from the People’s Bank, while some consider yuan‑denominated settlements to skirt U.S. monitoring.

Washington’s Commerce Department reiterated that the sanctions “unlawfully restrict normal trade” and pledged to enforce compliance. The next face‑to‑face summit between President Trump and President Xi, scheduled for later this month, will test whether the dispute spirals into broader economic retaliation.

China has previously blocked a $2 billion Meta acquisition of AI startup Manus, signaling a broader strategy of leveraging non‑military tools—from rare‑earth export controls to technology bans—to pressure the United States. Observers warn that if secondary sanctions extend to state‑owned lenders, Beijing could respond with even harsher measures, potentially affecting global supply chains for energy and critical minerals.

For context on China’s expanding security posture, see our recent analysis of nuclear developments.

Intel provided by Julian Vance (Senior Global Security Correspondent).