ChinaCountersU.S.SanctionsonRefineriesWithBlockingOrder

China’s Ministry of Commerce has issued an injunction barring domestic companies from recognizing or complying with U.S. measures targeting five Chinese refineries over alleged involvement in Iranian oil trade.

The order, released Saturday, marks Beijing’s first use of a newly enacted blocking statute aimed at shielding Chinese firms from the extraterritorial reach of foreign sanctions and limiting losses caused by over-compliance. Such measures are often described as “long-arm jurisdiction,” a practice where a nation extends its domestic laws to foreign entities, typically to safeguard national security and economic interests.

The ministry identified five refineries sanctioned by the U.S. since 2025 — Hengli Petrochemical (Dalian) Refinery Co. Ltd., Shandong Shouguang Luqing Petrochemical Co. Ltd., Shandong Jincheng Petrochemical Group Co. Ltd., Hebei Xinhai Chemical Group Co. Ltd., and Shandong Shengxing Chemical Co. Ltd.

It said Washington’s actions against them, including placement on the Specially Designated Nationals (SDN) list, asset freezes and transaction bans, constitute an improper extraterritorial application of foreign law.

Hengli Petrochemical (Dalian) Refinery, a core subsidiary of Shanghai-listed Hengli Petrochemical Co. Ltd. (600346.SH -0.59%), was the latest to be targeted when the U.S. Office of Foreign Assets Control added it to the SDN list on April 24.

Inclusion on the SDN list freezes any assets under U.S. jurisdiction and cuts off access to dollar-denominated transactions. Blacklisted entities also put their trading partners at risk of secondary sanctions, complicating export operations.

In a stock exchange filing dated on April 27, Hengli Petrochemical said it has never traded with Iran and that its crude oil suppliers guarantee their shipments do not originate from U.S.-sanctioned areas. 

The company also said it has no subsidiaries, business operations or assets in the U.S. and it will continue settling crude oil purchases in yuan to secure its supply chain.

Saturday’s injunction aims to counter secondary sanctions and protect business activities that lack a U.S. nexus, a partner at a Chinese law firm told Caixin. The partner added that the order primarily shields non-dollar transactions within China.

The move follows new regulations implemented on April 13 that allow the State Council to issue injunctions prohibiting organizations and individuals from complying with foreign sanctions deemed illegitimate.

Yang Dacheng, an expert with the China Federation of Logistics and Purchasing, said previously, provisions addressing such risks had been scattered across multiple laws and regulations, limiting authorities’ ability to respond effectively to supply disruptions or extraterritorial legal pressure.

The new rules consolidate these provisions, align them with existing anti-foreign sanctions and export control regimes, and introduce targeted countermeasures, creating a more comprehensive framework for managing foreign-related risks, Yang said.

The commerce ministry said the injunction was issued in accordance with Chinese law. A spokesperson reiterated Beijing’s opposition to unilateral sanctions lacking United Nations authorization or a basis in international law, while emphasizing that the measure would not affect China’s compliance with international obligations or the rights of foreign-invested firms.

Contact editor Wang Xintong (xintongwang@caixin.com)