China Orders Banks to Freeze New Loans to U.S.-Sanctioned Refiners Amid HY Energy Lawsuit

China's NFRA has verbally directed major banks to pause new yuan-denominated loans to five U.S.-sanctioned refiners like Hengli Petrochemical, without recalling existing credit, escalating countermeasures to U.S. sanctions. This follows April 2026 U.S. Treasury sanctions on Hengli and warnings to two Chinese lenders on secondary sanctions risks. On the same day, HY Energy sued JP Morgan and Citigroup in Shanghai and Beijing over their 2023 freeze of $40 million payments to COPC—sanctioned by OFAC in February 2024—with funds remitted to OFAC in May 2024. The pre-May 1 directive contrasts a May 2 Ministry of Commerce notice urging defiance of sanctions via 2021 Blocking Rules.