Many equations in International Politics have changed since the beginning of the Russia-Ukraine War on February 24, 2022. The US has brought a major change in global trade by imposing economic sanctions on Russia. Not being able to use the US Dollar while trading with Russia has certainly given China some advantage as a number of countries have started using the Chinese Yuan as an alternative to the US Dollar. However, Beijing is not at all happy with Washington DC's decision to impose sanctions on various countries, as the move has created troubles for the Asian giant while trading with other countries. Beijing has been trying hard to find a permanent solution to this problem for a long time.
The Xi Jinping Administration has decided to retaliate against the Western World, including the US, in a legal way. China has passed a new law on Foreign Policy that combines some of the new rules with the old law, related to International Relations, of the country. According to sources close to the Chinese Foreign Ministry, the newly passed law shall help Beijing compete with the US and other enemy countries. The Government of China leans more towards National Security than the Economy in the new law. While the Government has used the term National Security seven times in the draft of the law, the term economy has been mentioned only twice.
China's National People's Congress passed the law on Foreign Relations on June 28, 2023. From now on, Beijing can apply the law on the basis of its relations with different countries. The Xi Administration has interpreted the new law as a legal weapon to protect China's national interests. The Asian powerhouse will be able to take tough economic measures against any country through this law. The US and various member countries of the European Union (EU) recently imposed sanctions on different Chinese companies. The move affects China's business abroad. Now, Beijing will be able to protect its rights through the new law, if the US sanctions on any country hurt China's interests in any way.
A couple of months ago, China started taking actions against various US companies in response to the sanctions imposed on the Chinese companies by the Joe Biden Administration. However, Beijing's move failed to create trouble for the US companies because of the dependence of other countries on the Dollar, especially in global trade. Hence, the Xi Administration has taken legal steps against the West. The new law makes it easier for China to defy the US sanctions.
Although Beijing's new law is aimed at countering the US and the EU, experts believe that China can also use this law against India. Beijing may take tougher economic measures against New Delhi by implementing the new law, if relations between the two Asian neighbours deteriorate. The Sino-Indian trade volume is substantial. Beijing may come down hard against New Delhi, if commercial interests of the former are hurt. Experts are of the opinion that China's economic sanctions may affect the Indian Economy in the coming months.
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