On April 7, 2026, the State Council promulgated the Regulations on the Security of Industrial and Supply Chains (国务院关于产业链供应链安全的规定, the “Regulations”) . Against the backdrop of shifting international geopolitics, including the escalation of war in Middle East, these Regulations represent the Chinese government’s most recent efforts to significantly upgrade supply chain management from a traditional economic policy to a core pillar of the national security framework.

Below is a summary of key points of the Regulations. An English translation of the full text and an official Q&A are also attached at the end for your reference.

1. Strategic Objectives and Legal Basis

•National Security Integration. The Regulations elevate supply chain management to a core national security priority, aiming to enhance "resilience" and "safety levels".

•Comprehensive Legal Authority. The Regulations are grounded in a number of major laws, including the National Security Law, Foreign Relations Law, Anti-Foreign Sanctions Law, and Foreign Trade Law.

2. Governance and Coordination

•Cross-Departmental Oversight. A unified working mechanism is established involving nearly every major ministry, including State Security, Industry and Information Technology (MIIT), Development and Reform (NDRC), and Ministry of Commerce (MOFCOM). It is worth noting that on April 8, 2026, the State-owned Assets Supervision and Administration Commission (SASAC) established the Bureau of Overseas State-owned Assets. Its primary responsibilities include: guiding the international operations of supervised enterprises, optimizing the layout and structure of overseas assets, overseeing the supervision of overseas assets of supervised enterprises, strengthening risk prevention and mitigation in overseas investment and operations, and handling overseas emergencies and crises. It is expected that the Bureau may subsequently  undertake work related to industrial and supply chain security in respect of the overseas assets of state-owned enterprises as well.

•Local Responsibility. Provincial and municipal governments are tasked with managing supply chain security within their specific jurisdictions under national coordination.

3. Critical Sector Protections

•Dynamic "Critical List". The State will maintain and periodically update a list of "Critical Sectors".Further details regarding this list remain to be clarified.

• Securing the Pipeline. Specific protections are mandated for the production and circulation of raw materials, technologies, equipment, and finished products within these sectors.

•Information Sharing. The government will promote interconnectivity and information sharing between industries and enterprises while enforcing strict data security.

4. Risk Monitoring and Emergency Response

•Early-Warning Systems. A monitoring system will evaluate the stability of supply channels and their impact on the economy.

•Mandatory/Voluntary Reporting. Enterprises and industry associations may voluntarily—and in certain cases are required to— report any discovered threats to supply chain security.

•Emergency Intervention. In crises, the State Council can authorize "emergency dispatch," use of national reserves, and organized production or transportation to stabilize chains.

5. Restrictions on Information Collection

•Ban on Unauthorized Audits. Article 13 explicitly prohibits any organization or individual from conducting unauthorized "investigations or information-gathering activities" related to supply chains within China. This is a direct counter to foreign-mandated ESG or labor audits that violate Chinese laws. This is also consistent with prior Chinese practice, as Chinese authorities have previously sanctioned certain entities for engaging in information-gathering activities related to sensitive sectors in China. One example is a U.S. data intelligence firm, which was subjected to Chinese countermeasures in 2023 for allegedly collecting Xinjiang-related sensitive information and supporting U.S. sanctions.[1]

6. Investigations and Countermeasures

•Retaliation Against Foreign Sanctions. If a foreign country implements "discriminatory" restrictions or "de-risking" measures, China may conduct security investigations and retaliate with export bans or special fees. This provision can also be seen as an extension of China’s Anti-Foreign Sanctions Law, which has been in force since June 2021, into the supply-chain security context. A more pertinent example is China’s use of the Unreliable Entity List against PVH Group: MOFCOM opened an investigation into PVH in September 2024 over alleged discriminatory measures involving Xinjiang-related products, and in February 2025 formally listed PVH, stating that it had violated normal market trading principles, interrupted normal transactions with Chinese companies, and taken discriminatory measures against them.[2]

•Addressing Market Disruptions. If a foreign company "interrupts normal transactions" (e.g., stops supplying a Chinese partner to comply with foreign laws) in a way that harms China’s security, the government can ban them from importing, exporting, or investing in China.

•Enforcement on Domestic Entities. All organizations and individuals within China are legally required to execute these countermeasures. Violators face penalties, including being barred from government procurement and being restricted from exporting data or personal information. This provision also aligns with China’s existing anti-sanctions framework. Under Articles 11 and 14 of the Anti-Foreign Sanctions Law, domestic entities are required to implement countermeasures and may incur legal liability for non-compliance, while Article 13 of the Regulations on the Implementation of the Anti-Foreign Sanctions Law of the People’s Republic of China spells out a fuller set of consequences, including restrictions on government procurement, bidding, trade in goods, technologies and services, cross-border data and personal information flows, and even entry, stay, or residence in China.

7. Self-Controllability Requirements

•Technological Sovereignty. Enterprises and research institutions are directed to ensure that core technologies, information systems, and data are "safe and controllable".

•Social Capital. The Regulations encourage private and social funding to flow into R&D for core technology breakthroughs in critical fields.

Commentaries: Implications to Multinationals

We believe that the Regulation serves as a "Basic Rule" for economic security that will potentially trigger a wave of detailed ministry-level implementation rules. For multinationals (MNCs), the landscape is shifting from "Efficiency-First" to "Compliance-and-Security-First."

1. Increased Regulatory Scrutiny & "Double-Bind" Compliance

MNCs may face a "dual-compliance" dilemma. For example, while Western governments may require supply chain audits (e.g., UFLPA or EU CSDDD), Article 13 of the Regulations may classify such data collection as illegal in China. MNCs may find themselves increasingly challenged to satisfy home-country transparency requirements without violating Chinese security laws.

2. The "Critical Sector" Perimeter

If an MNC operates within a designated "critical sector," its commercial activities—even those happening globally—could trigger a Chinese security review. If a global HQ decides to move a production line from China to Southeast Asia to "diversify", it cannot be ruled out that this may be interpreted as "interrupting normal transactions" under Article 15 if it is deemed to violate normal market transaction principles, is discriminatory, or "causes substantial harm to China’s industrial and supply chain security", leading to investigations or blacklisting of the global parent company.

3. Enhanced Security and Controllability

The Regulations’ emphasis on "self-controllable" technology (Article 12) may push MNCs to further localize their R&D and data management. "In China, For China" is no longer just a business strategy; it is becoming a regulatory necessity to avoid being flagged as a "security risk" due to over-reliance on external supply nodes.

4. Domestic Enforcement Burden&Tools

Articles 13 through 16 are particularly sharp: They empower Chinese government agencies to take enforcement actions against MNCs (including their Chinese subsidiaries and headquarters) which violate the requirements in this regulation, such as illegally collecting information on supply chains, discrimination or disruption of normal commercial transactions with China. Conversely, these same provisions give Chinese enterprises a legal basis to seek remedies—through administrative complaints or judicial proceedings—against foreign entities that impose discriminatory measures. A recent Nanjing court case[3], where a Chinese company successfully recovered over RMB 80 million from a foreign counterpart that suspended payments citing third-country sanctions, illustrates that such recourse is already available and effective.

Below is the courtesy English translation of the Regulations on the Security of Industrial and Supply Chains.

Regulations of the State Council on the Security of Industrial and Supply Chains[4]

(Promulgated and Effective as of April 7, 2026)

Article 1 These Regulations are formulated in accordance with the National Security Law of the People's Republic of China, the Foreign Relations Law of the People's Republic of China, the Anti-Foreign Sanctions Law of the People's Republic of China, the Foreign Trade Law of the People's Republic of China, and other relevant laws, for the purposes of preventing industrial and supply chain security risks, enhancing the resilience and security levels of industrial and supply chains, and safeguarding economic and social stability as well as national security.

Article 2 Work concerning the security of industrial and supply chains shall implement the overall national security outlook; coordinate development and security as well as domestic and international dimensions; advance high-level opening-up; and promote the stability and smooth flow of global industrial and supply chains.

Article 3 The State shall establish and improve a working mechanism for industrial and supply chain security to coordinate efforts in a unified manner. Departments of the State Council, including Foreign Affairs, Development and Reform, Industry and Information Technology, Public Security, State Security, Legal Affairs, Finance, Natural Resources, Transportation, Agriculture and Rural Affairs, Commerce, Financial Management, Customs, Market Supervision, and Cyberspace Administration, shall be responsible for industrial and supply chain security work according to their respective divisions of responsibility. Relevant departments of the State Council shall strengthen coordination and cooperation in this regard. The people's governments of provinces, autonomous regions, and municipalities directly under the Central Government shall be responsible for industrial and supply chain security work related to their respective administrative regions under the unified national coordination.

Article 4 The State shall guide the rational and orderly layout of industrial and supply chains; promote the digitalization and intellectualization of industrial and supply chains; enhance the level of safety and controllability of industrial and supply chains; and facilitate high-quality development. The State encourages and supports enterprises in exploring diversified supply channels, engaging in supply chain cooperation, participating fairly in market competition, and improving their capacity to prevent security risks.

Article 5 Adhering to the principles of equality, mutual benefit, and win-win cooperation, the State shall strengthen international cooperation in the field of industrial and supply chains and actively participate in the formulation of related international rules.

Article 6 Relevant departments of the State Council and local people's governments at the provincial level shall, in the process of formulating relevant plans, fully consider the potential impact on industrial and supply chain security.

Article 7 The State shall strengthen security protections for critical sectors of industrial and supply chains. Relevant departments of the State Council shall formulate a list of critical sectors and implement dynamic adjustments to maintain the stable and continuous operation of the production and circulation of raw materials, technologies, equipment, and products in these sectors.

Article 8 Relevant departments of the State Council shall promote information sharing in critical sectors; strengthen information platform support; guide interconnectivity between industries and enterprises; and take effective measures to ensure data security.

Article 9 The State shall establish and improve a monitoring and early-warning system for security risks in critical sectors. Relevant departments of the State Council shall organize evaluation and monitoring of the stability of supply channels for raw materials, technologies, equipment, and products, as well as their impact on economic and social stability and national security, to identify risks and release timely warning information. Enterprises, industry associations, and chambers of commerce that discover circumstances affecting industrial and supply chain security may report to the relevant departments of the people's governments at or above the county level.

Article 10 The State shall establish and improve a security risk prevention system for critical sectors. Relevant departments of the State Council shall organize the development of physical reserves and capacity reserves in critical sectors, increase research and development efforts for technologies, equipment, and products, and enhance the anti-risk capabilities of industrial and supply chains. Relevant departments of the State Council and local people's governments shall take targeted prevention measures based on the characteristics of their respective industries and regions.

Article 11 The State shall establish and improve an emergency management system for security in critical sectors. Relevant departments of the State Council shall formulate emergency response plans. Where circumstances affecting the security of critical sectors jeopardize economic and social stability or national security, the State Council or its authorized departments may decide to implement emergency measures such as emergency dispatch, utilization of reserves, and organized production, transportation, and supply. Relevant organizations and individuals shall cooperate with the implementation of such emergency measures.

Article 12 The State encourages and guides the investment of social capital to support research and development in critical fields and core technology breakthroughs. Enterprises and scientific research institutions shall improve their risk prevention and control systems to ensure that core technologies and related information systems and data are safe and controllable.

Article 13 Where any organization or individual violates the laws, administrative regulations, or departmental rules of China by conducting investigations or information collection activities related to industrial and supply chains within the territory of China, the relevant departments shall take corresponding handling measures in accordance with the law.

Article 14 Where foreign countries, regions, or international organizations violate international law and the basic norms of international relations by adopting discriminatory prohibitions, restrictions, or other similar measures against China, or by implementing or assisting in actions that harm China’s industrial and supply chain security, the relevant departments of the State Council have the power to conduct security investigations. The State Council may take measures including, but not limited to, prohibiting or restricting relevant imports and exports of goods and technologies, restricting international trade in services, or imposing special fees. Relevant departments may, in accordance with the Anti-Foreign Sanctions Law, include the responsible organizations or individuals in a countermeasure list and take corresponding retaliatory measures.

Article 15 Where foreign organizations or individuals violate normal market transaction principles, interrupt normal transactions with Chinese citizens or organizations, or take discriminatory measures that cause substantial harm or a threat of substantial harm to China’s industrial and supply chain security, the relevant departments of the State Council have the power to conduct investigations. During the investigation, parties shall cooperate; the departments may inquire of parties and copy relevant documents. Based on the results, the State Council may take measures such as prohibiting or restricting their import/export activities, restricting their investment in China, or prohibiting Chinese entities from transacting or cooperating with them. These measures may extend to organizations effectively controlled by the foreign organization or individual.

Article 16 Organizations and individuals within the territory of China shall execute the measures taken by the relevant departments of the State Council in accordance with Articles 14 and 15. For those who violate the above, the departments have the power to order corrections and may prohibit them from participating in government procurement, restrict their data and personal information exports, or restrict their entry/exit from the territory.

Article 17 The State encourages and supports professional service institutions, such as law firms and notary offices, in providing legal services related to industrial and supply chain security to Chinese citizens and organizations.

Article 18 These Regulations shall enter into force on the date of promulgation.

Below is the courtesy English translation of the Q&A from an Official of the Ministry of Justice of the People’s Republic of China on the Regulations of the State Council on the Security of Industrial and Supply Chains[5]

On March 31, 2026, Premier Li Qiang of the State Council signed State Council Decree No. 834, promulgating the Regulations of the State Council on the Security of Industrial and Supply Chains (hereinafter referred to as the “Regulations”), which came into force upon promulgation. The person in charge of the Ministry of Justice of the People’s Republic of China answered questions from reporters regarding relevant issues.

Q: Could you briefly introduce the background for the issuance of the Regulations?

A: The Central Committee of the Communist Party of China and the State Council attach great importance to the security of industrial and supply chains. President Xi Jinping has made multiple important instructions, emphasizing the need to continuously promote scientific and technological innovation and institutional innovation, overcome bottlenecks, blockages, and vulnerabilities in supply constraints, and enhance the competitiveness and security of industrial and supply chains. The Third and Fourth Plenary Sessions of the 20th Central Committee of the Communist Party of China made arrangements to improve systems for enhancing the resilience and security of industrial and supply chains. Some countries have successively adopted legislation and comprehensive planning measures to safeguard their own industrial and supply chain security. Although China’s existing laws and regulations contain provisions related to emergency support, export control, and countermeasures, there has been no specialized legislation dedicated to industrial and supply chain security. To enhance resilience and security levels, ensure effective responses to internal and external risks, and maintain stable and smooth operations, it is necessary to fill this legislative gap and further strengthen legal safeguards in this area.

Q: What is the overall approach to formulating the Regulations?

A: First, adhere to the principle of coordinating development and security. While promoting high-quality development of industrial and supply chains, institutional measures are established from a risk prevention perspective to safeguard their security. Second, prioritize urgent needs. The Regulations focus on key sectors related to economic and social stability and national security, adopting a “small incision” approach to build relevant systems while ensuring alignment with existing institutional frameworks. Third, adhere to a problem-oriented approach. In response to prominent practical issues, mechanisms for industrial and supply chain security are established and improved, strengthening risk early warning, prevention, and emergency management. At the same time, systems for security investigations, countermeasures, and extraterritorial application are clarified for actions that harm China’s industrial and supply chain security.

Q: What principles for industrial and supply chain security are stipulated in the Regulations?

A: The Regulations implement the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council and provide that:

1. Work on industrial and supply chain security shall follow a holistic approach to national security, coordinate development and security, balance domestic and international considerations, promote high-level opening-up, and facilitate the stability and smooth functioning of global industrial and supply chains.

   
   

2. Support shall be given to scientific and technological research and development in key areas and breakthroughs in core technologies. Efforts shall guide the rational and orderly layout of industrial and supply chains, promote digitalization and intelligent transformation, enhance security and controllability, and foster high-quality development.

   
   

3. The principles of equality, mutual benefit, and win-win cooperation shall be upheld. International cooperation in industrial and supply chains shall be strengthened, and active participation in the formulation of relevant international rules shall be encouraged.

Q: How do the Regulations highlight key areas in safeguarding industrial and supply chain security?

A: Given the wide scope and numerous links involved, the Regulations adopt a “small incision” approach, focusing on areas related to economic and social stability and national security. A list system for key areas is established to promote coordinated efforts and concentrated resources. For key areas included in the list, the Regulations set out clear requirements:

1. Promote information sharing while ensuring data security;

   
   

2. Establish and improve risk monitoring and early warning systems, conduct assessments and monitoring, and promptly release warning information;

   
   

3. Establish and improve risk prevention systems, including physical reserves and capacity reserves, and increase investment in the research and development of technologies, equipment, and products;

   
   

4. Establish and improve emergency management systems, formulate emergency response plans, and take measures such as emergency dispatching and utilization of reserves in accordance with procedures.

Q: How do the Regulations address acts that harm China’s industrial and supply chain security?

A: Article 14 and 15 of the Regulations provide for such acts. First, where foreign states, regions, or international organizations violate international law or the basic norms of international relations and adopt discriminatory prohibitions, restrictions, or similar measures against China in the field of industrial and supply chains, or implement or assist in acts that harm China’s industrial and supply chain security, relevant departments of the State Council are authorized to conduct security investigations. Based on procedures, corresponding measures may be taken, including but not limited to restricting or prohibiting imports and exports of goods and technologies or international service trade, and imposing special charges. Relevant organizations or individuals may also be included in countermeasure lists in accordance with laws such as the Anti-Foreign Sanctions Law of the People’s Republic of China and the Provisions on the Implementation of the Anti-Foreign Sanctions Law of the People’s Republic of China. Second, where foreign organizations or individuals violate normal market transaction principles, interrupt normal transactions with Chinese citizens or organizations, adopt discriminatory measures, or engage in other acts causing or posing a substantial threat to China’s industrial and supply chain security, relevant departments of the State Council may conduct investigations. Based on the results, measures may include restricting or prohibiting their import and export activities related to China, restricting or prohibiting investment within China, restricting or prohibiting transactions or cooperation with domestic entities, restricting entry of relevant personnel and means of transportation, and canceling or restricting their work, stay, or residence qualifications in China. Such measures may also apply to entities actually controlled by or established with the participation of such foreign organizations or individuals.

Q: How do the Regulations ensure information security of industrial and supply chains?

A: In response to issues such as illegal information collection activities related to industrial and supply chains, the Regulations establish an information security system:

1. Where any organization or individual conducts information collection activities such as investigations related to industrial and supply chains within China in violation of laws, administrative regulations, departmental rules, or relevant state provisions, competent authorities shall take corresponding measures in accordance with the law;

   
   

2. Enterprises and research institutions shall improve risk prevention and control systems to ensure the security and controllability of core technologies, related information systems, and data. Relevant authorities shall strengthen guidance and training;

   
   

3. Enterprises, industry associations, and chambers of commerce that identify situations affecting industrial and supply chain security may report them to relevant authorities.

[Note] 

[1]https://www.fmprc.gov.cn/fyrbt_673021/202312/t20231226_11213135.shtml

[2]https://www.mofcom.gov.cn/zwgk/zcfb/art/2024/art_990973ae8cba408883fa028c374c2df3.html; https://www.mofcom.gov.cn/zwgk/zcfb/art/2025/art_ab15d2258dda4e93b8ad1ec4776d37c3.html. For more detailed analysis, please refer to: https://www.theworldlawgroup.com/membership/news/news-fqas-on-china-s-export-control-and-anti-sanction-lists.

[3]https://njhsfy.gov.cn/zh/news/detail/id/10073.html

[4]https://www.gov.cn/zhengce/content/202604/content_7064837.htm

[5]https://www.moj.gov.cn/pub/sfbgw/zcjd/202604/t20260407_533568.html