How will China’s regulation on countering unjustified extraterritorial jurisdiction work in practice?
By Zheng (Sophia) Tang
China’s new Regulation on Countering Unjustified Extraterritorial Jurisdiction by Foreign States (for an unofficial English translation, see here) introduces a potentially significant conceptual shift in the global debate over jurisdictional conflicts. Rather than asking only whether a foreign state’s exercise of jurisdiction is lawful under international law, the Regulation creates a further requirement: that such jurisdiction be “justified.” This raises a fundamental question for businesses, regulators, and international lawyers: how will Chinese authorities distinguish justified from unjustified foreign jurisdictional claims in practice?
Legality is Insufficient
The innovation of the Regulation, issued by the State Council, lies not merely in establishing a countermeasure mechanism that the Chinese government may activate in response to unjustified extraterritorial jurisdiction claims by foreign states. The deeper significance is the creation of a new standard for evaluating cross-border exercises of jurisdiction. Traditional international law has generally approached extraterritorial jurisdiction through a legal-illegal binary framework. However, as highlighted in the 1927 Lotus case, this framework is permissive and highly elastic. It allows states to find a plausible basis, whether under territoriality, nationality, or effects principles, for almost any claim, leading to debates that often devolve into interpretive contests. A state can act in a manner that is not strictly “illegal” but nonetheless is excessive, disproportionate, and harmful to other states’ fundamental interests.
A state can act in a manner that is not strictly “illegal” but nonetheless is excessive, disproportionate, and harmful to other states’ fundamental interests.
The “unjustified” standard directly addresses this gap. As defined by Article 6 of the Regulation, “justification” is a multi-factor concept beyond a simple breach of international law that considers: (1) compliance with international law and basic norms of international relations; (2) the appropriateness of the nexus between the conduct and the claiming state; (3) harm to China’s sovereignty, security, development interests, or the rights of its citizens and organizations; and (4) other relevant factors. This creates a new category of state actions that are “legal but unacceptable,” moving the evaluation from a binary rule-based inquiry to a more holistic, interest-based assessment.
The Challenge of Uncertainty
The factors in Article 6 are deliberately open-ended. This flexibility allows the government to respond to rapidly changing forms of extraterritorial regulation, including sanctions, export controls, data regulation, supply-chain regulation, and foreign economic investigations. However, broad standards also create uncertainty.
The State Council Legal Affairs Office (now lodged in the Ministry of Justice or MoJ) could address this uncertainty by developing more detailed guidance around Article 6. The first step would be clarifying the role of each factor. The first factor, “compliance with international law and basic norms of international relations,” could function as a threshold inquiry. It would examine whether the foreign jurisdiction lacks a recognized jurisdictional basis or infringes any treaty prohibition. However, the Regulation does not treat illegality as the sole criterion. A foreign measure may potentially be considered unjustified even where a recognized jurisdictional link exists.
The second factor, “whether the connection between the foreign state and the regulated conduct is appropriate,” is likely to become the central element. Under a strictly formalist approach, the mere existence of a recognized connecting factor, however nominal, generally shields extraterritorial jurisdiction from being deemed per se illegal. Against this background, the second factor is interpreted as a distinct threshold inquiry into the substantive quality of the jurisdictional nexus. Guidance could distinguish between strong and weak connecting factors. Direct territorial conduct, meaningful nationality links, or substantial effects within the regulating state may normally support jurisdiction. By contrast, remote connections, such as the use of minor foreign technology components, indirect supply-chain relationships, or minimal market presence, may require additional justification. This factor is particularly important because many contemporary jurisdictional conflicts arise not from an absence of any connection, but from expanding theories of connection that rely on trivial or merely formal links. The key question is no longer whether a connection exists, but whether that connection is sufficiently substantial to justify global regulatory effects.
The third factor introduces a consequential assessment. The focus shifts from the quality of the foreign state’s connection to the actual or reasonably anticipated harmful impact on Chinese interests. The MoJ may need to clarify whether any negative economic effect is sufficient to trigger this factor, or whether the harm must reach a certain level of seriousness. A predictable system would likely require consideration of factors such as the scale and duration of economic impact, the strategic importance of the affected industries, the degree of interference with Chinese regulatory autonomy, and whether Chinese entities are effectively forced to choose between conflicting legal obligations.
Finally, the MoJ may also consider “other factors,” which provides necessary flexibility but requires careful interpretation. It could incorporate principles such as proportionality, international comity, reciprocity, and the availability of international cooperation mechanisms. Without a clear guidance, however, the factor risks becoming an unlimited discretion clause.
The future development of Article 6 will determine whether the Regulation becomes primarily a political instrument or a genuine legal framework for managing jurisdictional conflicts.
The future development of Article 6 will, therefore, determine whether the Regulation becomes primarily a political instrument or a genuine legal framework for managing jurisdictional conflicts. Detailed guidance from the MoJ could transform “unjustified jurisdiction” from an abstract concept into a structured legal test. Such guidance would not necessarily eliminate governmental discretion but it would make discretion more transparent and predictable.
Diplomatic Channels: The Unseen Path?
It is also possible that Article 6 will play a secondary role in practice. The Regulation places significant emphasis on dialogue and coordination. Article 4 provides that where China and another state both claim jurisdiction over the same conduct, disputes may be resolved through treaties or diplomatic and departmental consultations, based on international law and basic norms governing international relations. Similarly, Article 6 expressly allows investigation and external consultation before a determination is made. This suggests a dual-track system: a formal legal track culminating in a public “unjustified” designation, and an informal diplomatic track designed to resolve conflicts without escalation. In practice, the diplomatic track may be the preferred route, allowing for quiet negotiation and compromise. Formal identification and public announcement may represent a stronger response reserved for situations where diplomatic engagement fails, where the interference with Chinese interests is considered particularly serious, or where China decides to signal the Regulation is not merely declaratory but an operative legal instrument with real-world consequences. The Regulation’s true impact may therefore lie not in the number of public designations, but in the leverage it provides China in diplomatic negotiations, reshaping the strategic calculus of other states even before the formal legal process is invoked.
A Potential Contribution to International Law
The broader significance of the Regulation lies in its potential to reshape the conceptual framework through which the international community debates extraterritorial jurisdiction. A central question of the 21st century is no longer simply whether states may exercise jurisdiction beyond their territorial borders, but under what conditions such extraterritorial regulation remains legitimate when it directly affects other states, their nationals, and their economic systems. The Regulation offers a new response to this question.
The “justification” standard has the potential to influence the development of customary international law.
The “justification” standard has the potential to influence the development of customary international law. In May 2026, the MoJ designated the European Commission’s investigative measures under the Foreign Subsidies Regulation directed at Chinese companies as “unjustified.” This inaugural application demonstrates that the standard is not merely theoretical or declaratory, but an operational legal instrument capable of generating legal consequences. (In this case, the consequences include possible sanctions against any party cooperating with the European Commission’s investigation.)
The path from domestic legislative innovation to customary international law is neither automatic nor straightforward. State practice, while essential, is insufficient to create customary law without the accompanying element of opinio juris. At present, the international community has not reached a consensus that states are legally obligated to refrain from exercising “unjustified” extraterritorial jurisdiction. Even if other states, through their own domestic legislation, treaty practice, or judicial decisions, were to adopt analogous frameworks or invoke similar evaluative criteria, each state would inevitably tailor the factors to reflect its own interests by substituting its own sovereign concerns for the third factor and expanding the fourth factor to include whatever considerations best serve its policy objectives. Determining “justification” would then risk becoming little more than an expression of relative power, with stronger states imposing their evaluative standards on weaker ones.
Nevertheless, the significance of the Regulation does not depend on whether other states copy its exact methodology. What matters is whether the direction of thought that extraterritorial jurisdiction must be justified, rather than merely legally grounded, enters the international legal conversation. The Regulation offers a structured legal expression of a widely shared concern: the need to constrain excessive extraterritorial assertions and establish more predictable boundaries for jurisdictional exercise. Its articulation of the “unjustified” standard provides conceptual vocabulary that could facilitate future international discourse. It invites other states to engage in a different kind of argument about jurisdiction, asking not only whether a jurisdiction basis exists, but whether the exercise of power can be justified in a pluralistic international order.
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Zheng (Sophia) Tang is deputy director of the Wuhan University Institute of International Law and deputy dean of the Wuhan University Academy of International Law and Global Governance.
Suggested Citation:
Zheng (Sophia) Tang, “From Legality to Justification: How will China’s regulation on countering unjustified extraterritorial jurisdiction work in practice?,” USALI Perspectives, 7, No. 1, August 28, https://usali.org/usali-perspectives-blog/from-legality-to-justification.
The views expressed in USALI Perspectives are those of the authors, and do not represent those of USALI or NYU.
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