Summary
China's countermeasure system has reached maturity. On 23 July 2026, the EU placed 14 Chinese mainland and Hong Kong companies on its sanctions list over Russia. Within 24 hours, China's Ministry of Commerce added 14 EU military and high-end manufacturing entities to its export control list, including Germany's Rheinmetall.
On 5 August, the ministry issued five countermeasures against the US, including suspending CCC factory inspections by US certification bodies and tightening review of exports of key drone components to the US. China's countermeasures rest on a three-dimensional coordination of law, mechanisms and industry: the 2021 Anti-Foreign Sanctions Law established the framework, and in May 2026 the first blocking order was issued under the Blocking Measures. Industrially, China supplies 17 of the 34 key raw materials critical to the EU, with rare-earth permanent magnets reliant on China at over 98 percent.
China stresses 'defence in the second strike, lifting when sanctions are lifted'. In April 2026, after the EU withdrew sanctions on two Chinese financial institutions, China cancelled its corresponding countermeasures the next day.
Commentary
China's recent countermeasures against the US and EU show that it has built a mature countermeasure system combining legal and industrial levers, notably using critical supply chains such as rare-earth permanent magnets and drone components as leverage. For small and medium-sized enterprises in New Zealand, this invites a dual assessment. On one hand, China is New Zealand's largest trading partner; exports of dairy, meat and other goods depend on the Chinese market, and escalating global trade frictions could spill over into non-tariff barriers or demand fluctuations.
On the other hand, local agricultural drones and electronic equipment rely heavily on Chinese components, so export controls directly raise procurement risks. With over 90 percent of global rare-earth processing concentrated in China, green technology and precision manufacturing firms need to be alert to supply chain disruptions. New Zealand businesses should consider diversifying sources of critical materials and closely track changes to China's export control lists, building resilient supply chains amid the dynamic of 'lifting when sanctions are lifted'.
Keywords: China countermeasure system, counter-sanctions, Ministry of Commerce, export controls, EU sanctions, US sanctions, rare-earth supply chain, legal closed loop, defence in second strike, China-US relations
Source: China.org.cn
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