On October 26, 2026, China’s Ministry of Commerce released the Special Provisions on Protecting China’s Trade Secrets (Draft for Public Comment). The proposal is still under public consultation, and usually, there will be some changes in the latest version.
The approach is nevertheless quite similar to the US Protecting American Intellectual Property Act of 2022 (PAIPA), which links trade-secret misappropriation that implicates national interests to government-imposed economic restrictions. When my friend shared the news with me, he said nothing but quoted Lu Xun’s The True Story of Ah Q: “If they can do it, why can’t we?” That’s an appropriate comparison.
Days earlier, WAPO reported Pentagon espionage planning targeting China. The timing makes me wonder whether the draft’s release can be some sort of response. Nevertheless, as China gradually gains technological advantages in an increasing number of areas, stronger protection of China’s intellectual property is increasingly important. If we say that the US has been “crossing the river by feeling the stones” as it’s imposing more and more technology restrictions on China, then China is, in a sense, “crossing the river by feeling the US,” learning from the restrictions it has encountered and adapting similar tools.
Here are a few observations.
Not the First One
China already has a framework for using trade restrictions to protect its technology and national security interests. The 2020 Export Control Law already established control lists, licensing requirements, and end-user and end-use management for specified goods, technologies, and services. Put simply, it regulates what can be exported, as well as to whom and for what purpose.
The new draft would establish a basis for economic restrictions on foreign entities whose trade-secret infringements harm or pose a real threat to China’s sovereignty, security, or development interests.
Measures cover China-related trade in goods, technology, and services; exports of relevant items; new investment in China; and entry, work permits, and stay or residence status for relevant personnel. The consequences could extend and affect the entity’s broader business dealings with China.
Article 18 of the Export Control Law already provides for a control list of importers and end-users, transaction restrictions, applications for special transactions, and a mechanism for removal from the list. Therefore, the focus of the draft is on applying these tools to specific scenarios involving trade secret infringement, rather than on China having these measures for the first time.
What Problem Is It Trying to Solve?
I would like to quote the analysis supplied by the WeChat account Dongbuy aqiao Research Institute (东不压桥研究院), a professional account in this area:
“Previously, when foreign companies stole these trade secrets or used them without authorization, businesses primarily sought remedies through litigation and other legal channels. But cross-border cases present a very practical problem: once technology has been taken, it may quickly be replicated and used overseas. Even winning a lawsuit does not necessarily allow a company to recover the technology, let alone prevent its continued use.”
I think it’s to deter theft of trade secrets by raising the expected costs. As a loose analogy, it brings to mind the contest between Denying Access and overcoming that denial around the Taiwan Strait. Just for this time, the point is to change the other side’s calculation of costs and benefits.
The investment provision specifically concerns new investment. Combined with potential restrictions on trade, exports, and personnel, these measures could substantially disrupt an entity’s commercial relationship with China.
But it’s also not a comprehensive severing of all trade ties, or allowing economic restrictions in every cross-border trade-secret dispute. The key question will be where the authorities draw the line between harm to an individual company and a real threat to China’s national interests.
More than Punishment
Another important feature is the ability to modify or lift restrictions. Under the draft, an affected foreign entity that takes corrective action, stops the infringement, eliminates the danger, and compensates for losses may apply for relief, subject to an assessment by the Ministry of Commerce.
The draft does not provide a detailed operational test for determining whether remediation is sufficient. If a manufacturing process or algorithm has already been incorporated into an entity’s operations, would returning documents or deleting files really be enough? I suspect assessing remediation could be more complicated than imposing those restrictions in the first place, and substantial case-by-case judgment is required.
China is turning its experience of external technological restrictions into additional institutional tools to protect its own technological strengths. For now, the target is not limited to overcoming restrictions through greater technological self-reliance; it has also started to strengthen trade-secret protection and make the theft of trade secrets and the use of Chinese technology more costly.
Below is the English version of the draft; I used AI to help with my translation:
Special Provisions on Protecting China’s Trade Secrets
(Draft for Public Comment)
Unofficial translation
Article 1 [Purpose]
These Provisions are formulated in accordance with the Foreign Trade Law of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republic of China, and other relevant laws and regulations, for the purposes of safeguarding national sovereignty, security, and development interests and protecting the lawful rights and interests of rights holders.
Article 2 [Scope of Application]
These Provisions apply where a foreign entity engages in conduct that infringes China’s trade secrets in international economic, trade, or related activities, and that conduct also:
Harms China’s national sovereignty, security, or development interests; or
Poses a real threat to China’s national sovereignty, security, or development interests.
Article 3 [Definitions]
For the purposes of these Provisions, “foreign entities” include foreign enterprises, other organizations, and individuals.
For the purposes of these Provisions, “rights holders” means owners of trade secrets and persons authorized by such owners to use those trade secrets.
Article 4 [Division of Responsibilities]
The Ministry of Commerce shall be responsible for organizing the implementation of these Provisions. Together with relevant departments, it shall carry out the relevant work within their respective responsibilities and authority, and strengthen coordination, cooperation, information sharing, and notification.
The Ministry of Commerce, relevant departments, and their personnel shall, in accordance with law, maintain the confidentiality of state secrets, trade secrets, and other information subject to confidentiality requirements that come to their knowledge in the course of their work.
Article 5 [Measures]
Where a foreign entity engages in conduct specified in Article 2 of these Provisions, the Ministry of Commerce may decide to impose one or more of the following measures on the foreign entity concerned:
Restricting or prohibiting its engagement in imports and exports of goods and technologies, and international trade in services, involving China; and prohibiting exports of relevant items to it;
Restricting or prohibiting its new investment within the territory of China;
Restricting or prohibiting the entry into China of its relevant personnel, means of transport, and the like;
Restricting or revoking its relevant personnel’s work permits or eligibility to stay or reside within the territory of China;
Imposing fines of an appropriate amount in accordance with law, depending on the seriousness of the circumstances; and
Other necessary measures.
The measures specified in the preceding paragraph shall be implemented in accordance with law by the Ministry of Commerce together with relevant departments, within their respective responsibilities and authority. Relevant enterprises, other organizations, and individuals shall cooperate.
Article 6 [Investigations and Reporting]
Where a foreign entity engages in conduct referred to in Article 2 of these Provisions, the Ministry of Commerce shall have the authority to decide whether to initiate an investigation into whether that conduct harms China’s national sovereignty, security, or development interests.
Where the Ministry of Commerce decides to initiate an investigation, the foreign entity shall cooperate, submit to questioning, truthfully disclose the relevant circumstances, and provide relevant materials. The foreign entity may make statements and present arguments in its defense. Where the foreign entity fails to cooperate or otherwise obstructs the investigation, the Ministry of Commerce may make a decision based on the facts available to it.
Enterprises, other organizations, and individuals may submit suggestions or reports to the Ministry of Commerce concerning trade-secret infringements by foreign entities.
Article 7 [Modification and Cancellation]
A foreign entity subject to measures under Article 5 of these Provisions may apply for their modification or cancellation if it voluntarily takes corrective action, ceases the infringement, eliminates the danger, and compensates for losses. Its application shall provide facts and reasons demonstrating the corrective action taken, the elimination of the consequences of its conduct, and other relevant matters.
The Ministry of Commerce may, upon an application by the foreign entity or in light of actual circumstances, organize an assessment of the implementation and effects of the measures under Article 5 of these Provisions. Based on the assessment results, it may decide to maintain, suspend, modify, or cancel the relevant measures.
Article 8 [Public Announcements]
Decisions made by the Ministry of Commerce pursuant to Articles 5, 6, and 7 of these Provisions shall be publicly announced, except as otherwise provided by laws or administrative regulations.
Article 9 [Applications for Exemptions]
Where, under special circumstances, a Chinese enterprise, other organization, or individual has a genuine need to conduct transactions with a foreign entity subject to measures under Article 5 of these Provisions, it shall submit an application to the Ministry of Commerce, together with supporting facts and reasons. Upon approval, it may conduct the corresponding transactions with, or provide relevant items to, that foreign entity.
Article 10 [Effective Date]
These Provisions shall enter into force on the date of promulgation.