US Companies Face Compliance Dilemma as China Publishes Unreliable Entity List Rules

China will restrict the investment and trade privileges of foreign companies placed on its so-called Unreliable Entity List, a blacklist of foreign companies or individuals that China says threaten its national security. The long-awaited regulations come during a period of intensifying U.S.-China tensions over various hot-button issues such as TikTok and Hong Kong.

On Sept. 19, China's Ministry of Commerce (MOFCOM) published the Provisions on the Unreliable Entity List (不可靠实体清单规定), which outlined the criteria for inclusion and range of potential measures for blacklisted foreign firms and individuals. Article 2 sets out that any foreign entity that suspends "normal transactions" or discriminates against Chinese entities, violates normal market transaction principles, and causes "serious damage" to the legitimate rights and interests of Chinese entities, will be added to the blacklist.