China has issued legal injunctions protecting domestic oil refineries from US sanctions, deploying blocking statutes to shield Hengli and four smaller 'teapot' refineries from Washington's extraterritorial measures. The move represents Beijing's most direct counter-sanctions response to date, prioritizing energy security and domestic economic stability over diplomatic accommodation.
The injunctions, issued under China's Anti-Foreign Sanctions Law enacted in 2021, prohibit Chinese entities from complying with US secondary sanctions targeting refineries that process Iranian or Venezuelan crude oil. The legal mechanism mirrors European Union blocking statutes developed during transatlantic disputes over Iran sanctions, though Beijing's application appears more comprehensive and enforcement-oriented.
In China, as across Asia, long-term strategic thinking guides policy—what appears reactive is often planned. The decision to protect smaller 'teapot' refineries—independent processors typically located in Shandong province—signals domestic political priorities. These facilities provide regional employment and energy supply diversification, making them economically significant despite their modest scale compared to state-owned giants.
Blocking statutes function as legal shields, forbidding domestic companies from recognizing foreign sanctions, providing legal grounds to refuse compliance, and enabling Chinese courts to counter-sue entities enforcing US restrictions. Unlike European blocking statutes, which have rarely been enforced, China's legal framework includes explicit criminal penalties for companies that comply with foreign sanctions against Beijing's instructions.
The Trump administration had targeted these refineries as part of broader pressure on Iranian oil exports, threatening secondary sanctions on financial institutions processing payments for Iranian crude. China imports significant volumes from Iran and Venezuela, both under US sanctions, viewing energy diversification as essential to economic security amid US-China strategic competition.
Foreign analysts noted Beijing's counter-sanctions toolkit has evolved considerably since 2020. China's Unreliable Entity List, Export Control Law, and Anti-Foreign Sanctions Law now provide layered legal instruments to resist extraterritorial enforcement of US policy preferences. The refinery injunctions represent the first systematic application of these tools to protect specific commercial entities rather than issuing general policy statements.
