When the rules don’t match: how US and Chinese sanctions are reshaping African business

On 11 July 2026, the South China Morning Post published a dispatch from a quieter corner of the US-China rivalry: the African trading house. Its reporting describes companies, banks and brokers on the continent navigating two sanctions architectures that increasingly target the same counterparties, the same shipments and the same letters of credit, and that do not agree on who is a sanctioned actor in the first place.

The structural story is not new. Africa has been the third-party venue for great-power competition over the past decade, the staging ground on which Washington’s primary sanctions on Russia, Iran, Venezuela and Chinese tech and shipping firms collide with Beijing’s countersanctions and export-control regime. What is newer, and what the SCMP piece underlines, is the practical consequence for African operators. Compliance teams at midsized banks in Nairobi, Lusaka and Johannesburg are now adjudicating questions that legal counsel in Brussels and Washington are still arguing over: whether a Hong Kong subsidiary of a mainland firm is the same legal person as its parent; whether a payment routed through a UAE free zone washes clean; whether a European re-insurer that also serves Chinese cargo is permitted to settle a claim. These are not abstract puzzles. They are daily operating decisions with capital consequences.

The lede from the page is that compliance is no longer a back-office cost. It is a trade barrier. And African firms, with thinner legal benches and smaller balance sheets than their European or Chinese counterparts, absorb that barrier asymmetrically.

What the regime actually looks like

Two policy engines are pulling at the same African transaction. On one side, the US Treasury’s Office of Foreign Assets Control (OFAC) administers the bulk of secondary sanctions that reach non-US persons who deal with designated actors. The scope has widened through 2025 and 2026 to cover more intermediaries in third countries, more shipping service providers, and more dual-use goods routed through African ports. On the other side, China’s Ministry of Commerce export-control list and the so-called unreliable-entity regime, formalised in 2024 and tightened through 2025, target foreign companies that comply with US restrictions on Chinese firms.

The result, as the SCMP dispatch describes, is a transaction in Zambia or Mozambique where the same party can be told, by one regulator, that the deal is lawful, and by another, that it is not. African lawyers interviewed for the piece describe a hedging behaviour that has become routine: split the counterparty list, route the cargo differently, sometimes abandon the deal entirely.

The Africa-specific friction

Three features make this harder on the continent than in Europe or East Asia. First, the financial plumbing of African trade depends heavily on correspondent banking relationships held by a handful of international banks; when those banks de-risk a jurisdiction or a sector, local firms lose access to dollar clearing, and the sanctions architecture becomes the gatekeeper of who can transact at all. Second, mining and hydrocarbons, which dominate African export flows, are precisely the sectors where sanctions risk concentrates, Russian oil, Venezuelan crude, Iranian petrochemicals, gold from jurisdictions such as the DRC or Zimbabwe where washing allegations recur. Third, Chinese state-owned banks and policy lenders are a meaningful share of the continent’s project finance; a US designation of a Chinese entity, or a Chinese countersanction that blacklists a foreign logistics firm, can interrupt a financing relationship that no local bank can replicate.

The piece also makes clear that the friction is not symmetrical. African firms face a steeper learning curve on OFAC than on Chinese rules, partly because US secondary sanctions carry criminal-liability reach extraterritorially in ways Beijing’s do not. Treasury enforcement actions against European and Middle Eastern banks have, in the past three years, settled for hundreds of millions of dollars each. African compliance officers read those press releases the way others read central-bank circulars: as business forecasts.

What Beijing says back

The Chinese diplomatic line, surfaced in MFA briefings and Global Times commentary since 2024 and reiterated in the SCMP dispatch, is consistent: extraterritorial sanctions are unlawful under international law, the unreliable-entity rules exist to defend Chinese companies from coercion, and African states should be free to choose their partners. The Global Times and CGTN framing characterises US secondary sanctions as “long-arm jurisdiction” and a form of economic coercion targeting the developing world, language that finds an audience in African capitals skeptical of being squeezed between two big customers.

The substantive counter-argument, made less often but present in Chinese-language commentary, is that Beijing’s own unreliable-entity mechanism functions as a countersanction with its own extraterritorial reach. Chinese legal scholars writing in Red Flag Manuscript have argued that the regime is consistent with WTO principles when applied to security threats; Western trade lawyers disagree. African operators sit in the middle, with no obvious arbiter.

What changes for trade flows

The near-term pattern is already visible. Container bookings through the Bab el-Mandeb and around the Cape of Good Hope have shifted as Western shipping lines avoid designated vessels; Chinese carriers and certain Gulf operators have picked up slack. Refining of sanctioned crude increasingly happens in African and Asian refineries that have built bespoke compliance functions. Trade finance is being rerouted through non-dollar corridors when the dollar leg is blocked. None of this is new, these adaptations began accelerating in 2023. What the SCMP piece records is the institutional maturation: African compliance teams are now staffed, and bank risk committees now reject transactions for sanctions reasons that did not exist as a category five years ago.

The Volkswagen China result published the same day, a 26% year-on-year drop in deliveries to the lowest point since 2010, per SCMP’s separate reporting, sits adjacent to the sanctions story as a reminder of how quickly established trade flows can reverse when the policy environment turns. The German automaker’s retreat from the world’s largest auto market is not about sanctions, but the same lesson applies: trade wither where the rulebook is unstable, and the rules are most unstable where two great powers refuse to recognise each other’s authority over the same transaction.

What is unresolved

The dispatch leaves several threads hanging. The first is jurisdictional: when a Zambian copper trader pays a Hong Kong subsidiary of a Chinese SOE via a UAE broker for a shipment destined for Rotterdam, the actual enforcement authority is contested. The second is time: sanctions regimes are tightening, not loosening, on both sides through 2026, with new additions expected in the autumn OFAC publication cycle and in revisions to China’s unreliable-entity list. The third is who pays: African middlemen, traders, and small banks absorb compliance costs that neither Washington nor Beijing reimburses. The fourth, and least visible, is the divergence in stated rules and actual enforcement, OFAC reserves discretion to settle, and Chinese authorities grant waivers, but neither predictability has been tested at the African scale.

Desk note: Monexus reads the SCMP dispatch as a counterweight to the dominant Washington wire framing, which tends to treat sanctions enforcement as a rule-of-law story. The story on the ground in African trading rooms looks more like a rule-collision story: two systems with incompatible ontologies of who is a sanctioned actor, applied to the same goods, by intermediaries who cannot afford the lawyers. Monexus will follow up with an African banking correspondent on the precise mechanics of split-clearing and counterparty de-risking through the autumn.