MOFCOM Announcement No. 21

China's Ministry of Commerce issued Announcement No. 21 on 2 May 2026, directing Chinese citizens, companies and organisations not to recognise, enforce or comply with US Executive Orders 13902 and 13846 authorising OFAC's Iran secondary sanctions programme. The announcement activated China's dormant 2021 Blocking Rules for the first time in five years and created a private right of action allowing Chinese entities to sue Western counterparties in Chinese courts for complying with those US sanctions .

The 2021 Blocking Statute — formally the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures — was passed by MOFCOM as China's structural response to US secondary sanctions. It had never been activated prior to Announcement No. 21. By triggering it specifically against the two Iran-related executive orders, Beijing created a direct legal conflict for any multinational company operating in both the US and Chinese markets.

The announcement raises the compliance cost for Western firms: compliance with US Iran sanctions now exposes them to Chinese litigation, while non-compliance exposes them to US OFAC penalties. The move was timed one week before the Trump-Xi Beijing summit, giving China a legal card to play in negotiations over Iran's oil export pathway.

MOFCOM Announcement No. 21 named five specific Chinese refineries — Hengli Petrochemical (Dalian), Shandong Shouguang Luqing, Shandong Jincheng, Hebei Xinhai Chemical, and Shandong Shengxing — as legally barred from complying with OFAC's designations, with Article 9 creating a private right of action in Chinese courts against any firm that complies . The announcement was triggered directly by OFAC's General Licence V designation of Hengli on 24 April 2026 and designed to give Chinese banks legal shelter to continue processing Hengli transactions after the 30-day wind-down expired.

With the 24 May 2026 GL V expiry three days away as of 21 May, the announcement has not resolved the binary facing Chinese banks: MOFCOM No. 21 instructs them to ignore OFAC; OFAC secondary sanctions cut off any bank that clears a Hengli dollar payment from the US correspondent banking system. The enforcement risk lies with the third-party clearing bank, not the refinery — a Chinese bank routing a Hengli payment through a US correspondent triggers a blocked-property notice regardless of MOFCOM's domestic instruction. Hengli Petroleum Singapore has begun laying off staff, suggesting corporate-level acceptance that the dollar door closes Sunday even if physical crude routing continues via yuan channels .

The 19 May OFAC sb0502 action added 50+ entities and 19 vessels but no additional mainland Chinese refineries, confirming that the Hengli expiry — not a rolling designation programme — is the focal enforcement event . MOFCOM's blocking order has broader US-China sanctions architecture relevance: it is the first activation of China's blocking statute against any US secondary-sanctions programme, setting a precedent that Beijing may deploy against Russia or North Korea-related OFAC actions in future confrontations.