In May, China’s Ministry of Commerce took an unprecedented step: it ordered Chinese firms to disregard U.S. sanctions against five domestic refiners processing Iranian crude oil. Weeks later, China’s Ministry of Justice issued another first-of-its-kind order, declaring that the European Union’s antisubsidy probe into a Chinese security firm was an improper assertion of foreign jurisdiction.
These measures might seem like ordinary bureaucratic retaliation, the latest moves in a familiar cycle of sanctions, investigations, and countermeasures. But they are part of an important shift in the terms of global rivalry. Traditionally, assessments of a country’s ability to shape events beyond its borders have focused on its military strength, economic size, and cultural reach. Today, an understanding of national power must also include what countries can obtain through the law. Beijing’s recent moves to resist extraterritoriality flow directly from a strategic, state-led project to improve China’s legal power.
The United States led the construction of the postwar legal order, and for decades, it has had a disproportionate ability to shape global outcomes through legal instruments. In the early 2010s, for example, Washington leveraged various jurisdictional advantages to cut Iran off from oil markets and global banking, pressuring it into negotiations. The United States’ legal power has rested in part on wealth and military strength, but it has also depended on the capacity of American legal personnel, the credibility of U.S. legal institutions, and the jurisdictional control the United States has retained over key nodes of the global economy.
These advantages have not gone unnoticed in China. Over the past decade, Beijing has mobilized ministries, courts, law schools, and bar associations around a shared goal: enabling China to use the law more effectively beyond its borders. Beijing has invested in building a cadre of lawyers who understand foreign and international law. It has advised Chinese entities on how to defend themselves more effectively in foreign courts and international tribunals. It has promoted Chinese courts and arbitration bodies as alternatives to Western forums. It has expanded its use of sophisticated legal tools—including sanctions, blocking rules, export controls, and national security reviews—to police foreign actors’ conduct. And it has sought greater influence over global norms, from technical standards to rules governing sea-lanes.
China’s bid for legal power has enjoyed real success. Past a certain point, however, China will struggle. It is relatively easy to enact new laws and train better lawyers; it is harder to reproduce the institutional credibility and economic indispensability that made the United States a dominant legal force. But the United States cannot simply assume that its inherited advantages will endure. It must work to preserve the legal institutions, professional expertise, economic relationships, and international commitments from which U.S. legal power has long derived. If, instead, Washington dismantles the legal structures underpinning its power—as it has begun to in recent years—Beijing may be well positioned to step into the void.
BUILDING A CODE
Washington’s extraordinary legal power traces back to the central role the United States played in designing the post–World War II international order. Even before the war, the country had already developed a large legal profession, sophisticated corporate firms, and distinctive constitutional institutions, although European legal systems retained greater intellectual prestige. The United States’ wartime ascent allowed it to marshal those domestic capacities into building U.S.-centric international rules and institutions. Washington helped shape the UN Charter, the General Agreement on Tariffs and Trade, and the Bretton Woods system, embedding U.S. influence into institutions governing international security, trade, and finance.
The United States continued to accumulate legal power over the second half of the twentieth century. Its law schools, law firms, and government agencies helped develop a pipeline of talented lawyers expert in national security law, cross-border disputes, and international law. Today, the State Department’s Office of the Legal Adviser employs roughly 200 attorneys—nearly three times the approximately 70 lawyers employed by its British counterpart—and divides them among more than 20 specialized units that handle treaty negotiations and cases before international tribunals. At the Justice Department, the Office of Foreign Litigation protects American interests in thousands of proceedings around the world. These and other offices have given Washington unusual capacity to advance its interests abroad, in both courts and diplomatic forums.
A combination of legal credibility and economic leverage has also cemented the United States’ global legal reach. Washington has built on these advantages over decades, applying antitrust law to foreign firms, prohibiting bribery abroad, and using sanctions and export controls to shape the behavior of overseas actors. The country has evolved a distinctive form of jurisdictional power—the ability to bring foreign actors and activities within the reach of U.S. law. Parties to legal disputes often choose U.S. courts because they regard them as sophisticated and impartial. Foreign firms, meanwhile, may come into U.S. jurisdiction if their transactions clear in dollars, their products incorporate U.S. software or components, they seek to acquire an American company, or their conduct affects U.S. markets. These connections give U.S. lawmakers, courts, and regulators substantial reach in fields as varied as sovereign debt and terrorism financing.
These same advantages have strengthened Washington’s ability to shape global legal norms. American approaches to commercial law and corporate compliance have spread widely, often because foreign firms voluntarily conform to preserve access to U.S. markets. Global banks, for example, have built extensive sanctions-screening systems around rules administered by the U.S. Treasury. The United States is not the world’s only hub of legal influence. English common law still governs substantial rules on cross-border finance, shipping, commercial contracts, and international arbitration. The European Union exercises great influence in fields such as data protection, competition, and food safety. But through legal talent, legal reputation, and economic dependencies, the United States has remained a focal point in global law.
LAW AND A NEW ORDER
As China emerged as a global power, its leaders began to see law as an instrument of statecraft and to recognize the country’s vulnerability to other countries’ legal power. Pressure applied by Washington through sanctions, export controls, and prosecutions targeting the Chinese corporations Huawei and ZTE only underscored the urgency of building China’s domestic legal power. As early as 2014, Beijing began to stress the necessity of “foreign-related legal work”; at the Communist Party’s 2019 Fourth Plenum, leaders made strengthening China’s legal power part of a broader plan to modernize China’s system of governance. In 2023, the party devoted a Politburo study session to “foreign-related rule of law.” At that meeting, Chinese leader Xi Jinping identified strengthening China’s legal capacities as a “long-term need” for advancing the goal of national rejuvenation.
Chinese officials condemn American legal hegemony while closely studying the institutions and techniques that sustain it. One top priority has been to cultivate legal talent. Before Xi came to power in 2012, China already had more law schools than the United States, but they were of uneven quality and lacked systematic approaches to teaching foreign law. Chinese law schools have since launched several dozen programs, institutes, and degrees dedicated to training lawyers in international law and the legal systems of other countries. In 2024, Beijing designated 51 university-led partnerships that bring together law schools, government agencies, courts, law firms, and arbitration bodies to train students for international and cross-border legal practice.
Since 2012, Beijing has added extraterritorial provisions to more than 20 laws.
The government itself has established a dedicated Foreign-Related Rule of Law Bureau in the Ministry of Justice, a specialized international commercial court, and nationally designated research centers. Scholars and practitioners now advise Chinese entities on responding promptly to foreign litigation, avoiding default judgments, and presenting Chinese legal positions through expert testimony and amicus briefs. China has also invested in narrative power—the capacity to present its conduct in legal terms that foreign audiences will find intelligible and persuasive. As the party secretary of a major Chinese law school wrote in the People’s Daily, “enhancing propaganda ability” is key to Chinese legal ambitions. Chinese law schools have accordingly placed greater weight on teaching Chinese students to argue using the vocabularies of foreign legal systems. One leading school’s course on U.S. foreign relations law examined students by asking them to develop arguments based on the U.S. Constitution against a hypothetical change in American policy toward Taiwan.
Beijing has become especially concerned with foreign laws that reach Chinese actors. In a 2023 report, China’s Ministry of Foreign Affairs accused Washington of constructing “a massive, mutually reinforcing and interlocking legal system for long-arm jurisdiction.” China’s 2021 blocking rules sought to protect Chinese citizens and firms by authorizing the Chinese government to forbid local parties from complying with particular foreign laws and official measures, and regulations issued in 2026 by the State Council, China’s cabinet, created a broader mechanism for prohibiting Chinese parties from complying with improper foreign assertions of jurisdiction. In May, for instance, Beijing barred Chinese parties from complying with U.S. sanctions levied against five refiners accused of purchasing Iranian oil and from assisting with the EU’s antisubsidy investigation into Nuctech, a Chinese security-equipment firm.
Other measures have extended Chinese law outward. Since 2012, Beijing has added extraterritorial provisions to more than 20 laws. The 2020 Hong Kong National Security Law, for instance, claims jurisdiction over certain national-security offenses committed abroad against Hong Kong. China has expanded its offensive legal arsenal to export controls, foreign investment and cybersecurity reviews, and entity list and licensing regimes and used those tools to freeze assets, prohibit transactions, or restrict access to strategically important materials such as rare earths. Chinese courts have also widened their reach over cross-border disputes, particularly in global patent litigation, by ordering parties not to pursue or enforce competing proceedings abroad.
Ultimately, Chinese leaders believe their country must become a more active participant in international rule-making and a leader in institutional reform. Party directives call for greater Chinese influence over rules governing the oceans, polar regions, cyberspace, outer space, nuclear safety, anticorruption efforts, climate change, and international finance. They also urge more Chinese representation within international organizations. At the World Trade Organization, China has become an active litigant and coalition organizer. Chinese institutions have also gained substantial influence in developing international technical standards in areas such as telecommunications, e-commerce, and emerging technologies—even as Beijing creates and promotes alternative bodies, most successfully the Asian Infrastructure Investment Bank, which has developed into a major multilateral lender.
THE JURY IS OUT
China has not sought to emulate or disrupt every aspect of U.S. legal hegemony. It has concentrated on building a legal infrastructure that protects Chinese trade and investment and strengthens China’s capabilities in international rule-making. Its ambitions to export Chinese legal practices have been more selective, focusing on discrete tools and techniques—such as AI-assisted adjudication—rather than transplanting its legal practices wholesale.
These investments in legal power have paid real dividends. But China’s legal ambitions also have political limits. Beijing has tried to make its courts and arbitration bodies more attractive, creating specialized commercial courts and inviting foreign experts to participate in advisory roles in cross-border disputes. These reforms, however, remain embedded in a judiciary that is subordinate to Communist Party leadership. The China International Commercial Court, for example, is not a special island within China’s legal system; it is composed of Supreme People’s Court judges operating within the ordinary, party-led judicial hierarchy. To make Chinese legal institutions more appealing, Beijing would need to grant them genuine autonomy rather than merely expecting professionalism in routine cases. But as China’s 2018 detention of two Canadian citizens after Canada arrested a Huawei executive showed, the party readily interferes in the legal system when important interests are at stake.
The credibility of Chinese law is further undermined by Beijing’s messaging. Xi has stressed the importance of projecting an image of China as a rule-of-law country. Yet China increasingly uses the law to signal resolve and threaten retaliation. A legal system marketed as welcoming becomes less attractive when it is also advertised as a weapon of national struggle.
As China expands its legal power, the United States is willfully eroding its own.
And China’s legal ambitions face economic constraints. The global dominance of the dollar and the United States’ market size and technological leadership bring many outside actors within the reach of U.S. law. China has sought to build comparable leverage by promoting the renminbi in cross-border trade, developing alternative payment systems, and dominating critical supply chains. But financial market restrictions have kept the renminbi’s share of global foreign exchange reserves to low single-digit percentages.
China remains outflanked by the United States in many metrics of legal power. A Chinese sanction may bar companies’ access to China, but it generally cannot induce banks and companies around the world in the way a U.S. sanction can. As China’s own Ministry of Foreign Affairs lamented in 2023, the United States remains “the only sanctions superpower in the world.” Beijing has also struggled to make China a preferred forum for international disputes. The China International Commercial Court has handled less than 50 cases since its creation eight years ago. In 70 to 80 percent of the cases heard by the London Court of International Arbitration, both parties are foreign. By contrast, such cases make up less than two percent of the caseload of China’s leading commercial arbitration institution.
The United States still enjoys dominant legal power, and as things stand, China will be slow to catch up. But even as China seeks to grow its legal power, the United States is willfully eroding its own. The Trump administration’s attacks on judges and civil servants weaken confidence in U.S. legal institutions and the U.S. government’s capacity to pursue complex legal strategies beyond its borders. Washington is also surrendering influence in the forums in which global rules are made. After the United States withdrew from the World Health Organization and abandoned negotiations over a pandemic accord, the remaining WHO members adopted the agreement without Washington, and China pledged $500 million to help fill the resulting vacuum. The U.S. government’s aggressive use of export controls, technology restrictions, and financial chokepoints has encouraged other countries to reduce their exposure to U.S. jurisdiction.
If Washington continues to undercut its own advantages, China has established the foundations to provide at least some plausible replacements. Party supremacy may limit the credibility of Chinese courts, but it does not prevent China from winning cases abroad or from shaping global legal norms. China need not embrace a liberal rule of law to become a formidable legal power.
Loading…
