While media coverage in Taiwan frequently focuses on U.S. sanctions against China—particularly restrictions on high-performance chip exports—analysts warn that far less attention is paid to Beijing’s escalating retaliatory measures against Western nations.
Given Taiwan’s significant exposure to Chinese markets, experts argue that understanding how Beijing targets foreign enterprises is crucial for protecting Taiwanese business interests.
Targeting Defense Contractors
China has shifted its response to international arms sales to Taiwan from political condemnation to precise economic targeting. Following recent U.S. arms sales, China’s Foreign Ministry announced the "Decision on Taking Countermeasures Against U.S. Military-Industrial Related Enterprises and Senior Management Personnel" on Dec. 26, 2025.
The measures freeze all movable and immovable property of 20 U.S. companies within Chinese territory and prohibit Chinese organizations from conducting transactions with them. This effectively blocks bank accounts, joint venture equity stakes and outstanding receivables.
The sanctioned entities include Northrop Grumman Systems Corp., L3Harris Maritime Services, and Gibbs & Cox Inc.
Beijing also imposed individual sanctions on 10 senior executives, including Anduril founder Palmer Luckey, L3Harris Technologies Vice President John Cantillon, and Advanced Acoustic Concepts President Michael J. Carnovale.
In a separate move involving the financial sector, Beijing retaliated against EU sanctions on Chinese banks accused of violating restrictions on Russia. The Ministry of Commerce issued countermeasures effective Aug. 13, prohibiting two EU financial institutions—UAB Urbo Bankas and AB Mano Bankas—from conducting transactions within China.
Evolving Legal Framework
China's ability to enforce these measures is underpinned by the "Anti-Foreign Sanctions Law," passed in June 2021, and its implementation regulations, issued in March 2025.
Article 12 of the law prohibits organizations and individuals from assisting foreign nations in implementing discriminatory, restrictive measures against Chinese citizens. Article 13 mandates countermeasures for actions that endanger China's sovereignty, security, or development interests.
Under these provisions, chip manufacturers complying with U.S. bans or banks cooperating with foreign financial investigations risk having their Chinese assets—including cash, real estate and intellectual property—seized.
Weaponizing Intellectual Property and Antitrust Laws
Observers note that China is also utilizing intellectual property and antitrust tools to sanction Western enterprises in response to U.S. restrictions on companies like Huawei and SMIC.
The "State Council Regulations on Handling Foreign-Related Intellectual Property Disputes," effective May 2025, allows the government to strip patent protection from foreign companies if IP disputes are deemed to be used to "suppress China." This could legally allow Chinese enterprises to use Western technology without paying licensing fees.
Antitrust investigations have also become a political tool. Following trade war tariffs initiated by President Donald Trump in early 2024, China’s State Administration for Market Regulation investigated Google and imposed retaliatory tariffs on U.S. imports.
In December 2024, China launched an antitrust probe into restrictive conditions attached to Nvidia’s 2020 acquisition of Mellanox, a move widely viewed as a countermeasure against U.S. technology containment.
Future Risks and Mitigation
Looking ahead, analysts warn that China could impose massive fines on foreign enterprises under the guise of national security or data security. If companies are unable to pay, courts could force the auction or confiscation of equity and facilities.
In extreme scenarios, the "National Defense Mobilization Law" could be used to incorporate technology and energy assets, such as semiconductor fabs, directly into wartime systems. Additionally, China may leverage its dominance in the supply of rare earth elements like neodymium and dysprosium to force Western companies to choose sides in the U.S.-China rivalry.
Experts conclude that traditional investment protection agreements may prove ineffective against these evolving legal tools. Multinational corporations and Taiwanese companies operating on the mainland are advised to develop proactive risk mitigation strategies, including legal firewalls and debt shields, to protect against asset freezing. （Related： Opinion | Warsh Nomination Sparks Market Fears Over Liquidity Crunch ｜ Latest ）
*The author is the Director of the Financial Stability Center at the Taiwan Academy of Banking and Finance and a Special Research Fellow at National Taiwan University's Center for Public Economics.
