China’s MOFCOM Releases its Draft Special Provisions on the Protection of Chinese Trade Secrets for Comment
Published 3 November 2026
Sarah Xuan
On October 26, 2026, the Ministry of Commerce released the Special Provisions on the Protection of Chinese Trade Secrets (Draft for Public Comment) (the “Draft”) to solicit public comments, with a deadline of November 24, 2026.
China has established a legal framework for trade secret protection encompassing civil, administrative, and criminal protection. The Anti-Unfair Competition Law sets out the requirements for information to qualify as a trade secret, acts of infringement, and the corresponding liabilities, while the Provisions on the Protection of Trade Secrets further elaborate the rules on administrative protection; where an act constitutes a crime, criminal liability shall be pursued in accordance with the law. This framework also covers cross-border acts of infringement that meet the relevant conditions. Under Article 40 of the Anti-Unfair Competition Law, acts of unfair competition committed outside China that disrupt the competitive order of the domestic market and harm the lawful rights and interests of business operators or consumers within China shall be dealt with in accordance with that Law and other relevant laws.
Building on this framework, the Ministry of Commerce is establishing a special response mechanism under the Foreign Trade Law, the Anti-Unfair Competition Law, and other laws and regulations to address specific acts of trade secret infringement involving national sovereignty, security, and development interests. For foreign enterprises investing or doing business in China, a noteworthy implication is that acts of trade secret infringement meeting specified conditions may trigger restrictions on trade, new investment within China, and the entry of relevant personnel into China, thereby affecting their business arrangements in China.
The following provides an analysis of the key provisions of the Draft.
I. Scope of Application: Identifying the Conditions That Trigger Special Measures
(I) Trade Secret Disputes Must Have a Specified Nexus to National InterestsUnder Article 2, the Draft applies where foreign entities engage in acts involving infringement of Chinese trade secrets in international economic and trade activities and related activities, and such acts endanger China’s national sovereignty, security, or development interests, or pose an actual threat to those interests. Article 3 defines foreign entities as foreign enterprises, other organizations, or individuals.
These conditions jointly delimit the scope of the special mechanism. A foreign enterprise’s participation in a transaction, the cross-border flow of information, or the occurrence of a trade secret dispute is not, in itself, sufficient to trigger special measures; the specific conduct must be examined to determine whether harm or an actual threat to national interests exists. The concept of an “actual threat” also allows measures to be taken before harm to national interests has actually occurred, but such a threat must still be linked to acts involving trade secret infringement.
(II) Understanding the Boundaries of Application Through Technology Cooperation Scenarios
Taking technology cooperation between a foreign enterprise and a Chinese supplier as an example, the following scenarios illustrate the relationship between the two regimes.
1. Use of technical information within the scope of lawful authorization.
If a Chinese supplier lawfully licenses a foreign enterprise to use the relevant technical information, the foreign enterprise uses that information in accordance with the agreed terms concerning authorized entities, purposes, and scope, and no other acts of infringement occur, the prerequisite of infringing conduct required for the application of the Special Provisions is not met. The parties can facilitate smooth cooperation by clearly defining the scope of the license, confidentiality obligations, and permissions for sharing within the corporate group.
2. Infringement occurs, but the conditions for a nexus to national interests are not met.
If a foreign enterprise breaches its confidentiality obligations by disclosing the supplier’s confidential process to an unauthorized third party, but the conduct does not involve harm or an actual threat to national interests as required by Article 2, the conditions for applying the special mechanism are not met. However, if the information concerned qualifies as a trade secret, the conduct may still be subject to the general rules on trade secrets. The rights holder may seek civil remedies or administrative protection where the conditions governing jurisdiction and applicable law are met; where the conditions for criminal liability are satisfied, the matter may also be dealt with in accordance with the law. For conduct occurring outside China, the conditions for applying Article 40 of the Anti-Unfair Competition Law and other relevant provisions must also be examined.
3. The infringing conduct also endangers national interests or poses an actual threat to them.
If, in the above scenario, the process concerned involves critical production capacity, and specific facts indicate that its unlawful acquisition, disclosure, or use would endanger China’s national security or development interests, or pose an actual threat to them, the conduct may fall within the scope of the Special Provisions. In such circumstances, the Ministry of Commerce may assess whether to take corresponding measures under the proposed mechanism, while existing legal remedies may also apply subject to their respective conditions.
These scenarios show that the key to understanding the Draft lies in separately examining whether trade secret infringement is established and whether the additional conditions for triggering the special mechanism are met.
II. Potential Implications: Extending Risk Assessments to Business Arrangements in China
(I) Trade and Investment Measures May Affect Ongoing Operations and New Projects
Article 5 provides that the Ministry of Commerce may take one or more measures, including restricting or prohibiting the foreign entities concerned from engaging in imports and exports of goods and technology and international trade in services involving China, prohibiting the export of relevant items to them, and restricting or prohibiting their new investment within China. These provisions mean that the risks concerned may extend to ongoing transactions and investment plans involving China and the entities concerned. Corporate legal teams should work with business, supply chain, and investment teams to map trading relationships with China, identify the dependence of key items, technology licenses, service arrangements, and proposed investment projects on particular group entities, and assess the impact of business disruptions on contractual performance.
In addition, the wording of the investment measures is limited to “new investment” within China and should not be directly construed as authorizing measures to dispose of existing investments. However, whether “new investment” covers particular capital increases, mergers and acquisitions, or reinvestment arrangements has yet to be further specified. For significant projects under planning, enterprises should continue to monitor relevant interpretations and carefully formulate provisions in transaction documents concerning regulatory changes, restrictions on performance, and closing conditions. Such contractual arrangements can help allocate risks but cannot substitute for compliance with specific regulatory decisions.
(II) Personnel Measures and Other Measures Need to Be Incorporated into Business Continuity Management
Article 5 also provides for restricting or prohibiting the entry into China of relevant personnel, means of transport, and the like; restricting or revoking relevant personnel’s work permits or eligibility to stay or reside in China; and imposing fines and taking other necessary measures in accordance with the law. For enterprises that rely on overseas management and technical personnel traveling to China to perform their duties, personnel measures may affect project implementation, technical support, and day-to-day management. Enterprises may establish arrangements for authorized substitutes and handovers for key positions to reduce their business dependence on the cross-border movement of individual personnel. Meanwhile, the scope of “relevant personnel” and their connection to the infringing conduct remain to be clarified, and it should not be presumed on this basis that all employees or management personnel will be subject to restrictions.
In addition, the provision on fines does not yet specify their amounts or calculation methods, and the limits of other necessary measures must also be assessed by reference to the corresponding legal bases and formal implementation arrangements. In internal reporting, enterprises should distinguish between measures expressly provided for in the text, issues awaiting clarification, and their own scenario assumptions, so as to avoid presenting potential risks as inevitable outcomes.
III. Procedural Arrangements: Participation in Investigations, Adjustment of Measures, and Transaction Exemptions
(I) Cooperation with Investigations and Protection of Information
Article 6 provides that the Ministry of Commerce may conduct relevant investigations, that foreign entities under investigation shall truthfully provide information and materials, and that they have the right to make statements and present arguments in their defense. Where an entity fails to cooperate with or obstructs an investigation, the Ministry of Commerce may make a decision on the basis of the facts available. Article 4 also expressly provides that the relevant departments and their staff are under a duty to maintain the confidentiality of trade secrets and other information obtained in the course of their work.
Enterprises may have their legal teams coordinate with the relevant teams to compile materials concerning the sources of information, the scope of authorization, and actual use, and to provide a full account of the facts and their positions. When submitting materials, they may identify confidential content and communicate with the competent authorities regarding appropriate confidential treatment, so as to accommodate both cooperation with the investigation and protection of information.
(II) Adjustment of Measures in Light of Remedial Action
Article 7 provides a clear avenue for the adjustment of measures. A foreign entity that takes the initiative to rectify its conduct, ceases the infringement and eliminates the danger, and compensates for losses may apply for the measures to be modified or lifted. The Ministry of Commerce may, upon application or in light of the actual circumstances, assess the effects of implementation and decide to maintain, suspend, modify, or lift the measures.
These provisions allow measures to be adjusted dynamically in light of subsequent developments. Enterprises may take remedial action tailored to the specific matters concerned and use corresponding records to demonstrate the effects of corrective and remedial efforts. Settlement and compensation arrangements reached with the rights holder may serve as relevant supporting materials, while the decision on whether to adjust the measures remains with the Ministry of Commerce, based on its assessment.
(III) Transaction Exemptions in Special Circumstances
Article 9 preserves the possibility of applications on a case-by-case basis for necessary transactions. Where, in special circumstances, Chinese enterprises, other organizations, or individuals have a genuine need to transact with a foreign entity subject to measures, they may explain the facts and reasons to the Ministry of Commerce and, upon approval, conduct the corresponding transactions or supply the relevant items.
For the business concerned, enterprises may first ascertain the scope of the specific measures, after which an eligible Chinese party to the transaction may apply for an exemption and proceed within the scope of the approval. This mechanism helps accommodate actual transactional needs during the implementation of measures, and subsequent provisions concerning its application requirements and procedures warrant continued attention.
Conclusion
The Draft seeks to improve the protection of trade secrets in matters involving foreign elements under the existing legal framework and to accommodate both the protection of rights and actual business needs through arrangements for participation in investigations, adjustment of measures, and transaction exemptions. The provisions are currently at the public consultation stage, and the specific standards and procedures for their application remain to be further clarified.
Foreign enterprises investing in China may, in conjunction with their existing compliance systems, make appropriate improvements to the management of trade secret authorization, use, and sharing within their corporate groups, and raise concerns and suggestions arising from business practice through the public consultation process. Continued attention to the final text and implementation arrangements will help enterprises accurately understand the requirements of the regime and properly conduct technology cooperation and day-to-day operations.
China has established a legal framework for trade secret protection encompassing civil, administrative, and criminal protection. The Anti-Unfair Competition Law sets out the requirements for information to qualify as a trade secret, acts of infringement, and the corresponding liabilities, while the Provisions on the Protection of Trade Secrets further elaborate the rules on administrative protection; where an act constitutes a crime, criminal liability shall be pursued in accordance with the law. This framework also covers cross-border acts of infringement that meet the relevant conditions. Under Article 40 of the Anti-Unfair Competition Law, acts of unfair competition committed outside China that disrupt the competitive order of the domestic market and harm the lawful rights and interests of business operators or consumers within China shall be dealt with in accordance with that Law and other relevant laws.
Building on this framework, the Ministry of Commerce is establishing a special response mechanism under the Foreign Trade Law, the Anti-Unfair Competition Law, and other laws and regulations to address specific acts of trade secret infringement involving national sovereignty, security, and development interests. For foreign enterprises investing or doing business in China, a noteworthy implication is that acts of trade secret infringement meeting specified conditions may trigger restrictions on trade, new investment within China, and the entry of relevant personnel into China, thereby affecting their business arrangements in China.
The following provides an analysis of the key provisions of the Draft.
I. Scope of Application: Identifying the Conditions That Trigger Special Measures
(I) Trade Secret Disputes Must Have a Specified Nexus to National InterestsUnder Article 2, the Draft applies where foreign entities engage in acts involving infringement of Chinese trade secrets in international economic and trade activities and related activities, and such acts endanger China’s national sovereignty, security, or development interests, or pose an actual threat to those interests. Article 3 defines foreign entities as foreign enterprises, other organizations, or individuals.
These conditions jointly delimit the scope of the special mechanism. A foreign enterprise’s participation in a transaction, the cross-border flow of information, or the occurrence of a trade secret dispute is not, in itself, sufficient to trigger special measures; the specific conduct must be examined to determine whether harm or an actual threat to national interests exists. The concept of an “actual threat” also allows measures to be taken before harm to national interests has actually occurred, but such a threat must still be linked to acts involving trade secret infringement.
(II) Understanding the Boundaries of Application Through Technology Cooperation Scenarios
Taking technology cooperation between a foreign enterprise and a Chinese supplier as an example, the following scenarios illustrate the relationship between the two regimes.
1. Use of technical information within the scope of lawful authorization.
If a Chinese supplier lawfully licenses a foreign enterprise to use the relevant technical information, the foreign enterprise uses that information in accordance with the agreed terms concerning authorized entities, purposes, and scope, and no other acts of infringement occur, the prerequisite of infringing conduct required for the application of the Special Provisions is not met. The parties can facilitate smooth cooperation by clearly defining the scope of the license, confidentiality obligations, and permissions for sharing within the corporate group.
2. Infringement occurs, but the conditions for a nexus to national interests are not met.
If a foreign enterprise breaches its confidentiality obligations by disclosing the supplier’s confidential process to an unauthorized third party, but the conduct does not involve harm or an actual threat to national interests as required by Article 2, the conditions for applying the special mechanism are not met. However, if the information concerned qualifies as a trade secret, the conduct may still be subject to the general rules on trade secrets. The rights holder may seek civil remedies or administrative protection where the conditions governing jurisdiction and applicable law are met; where the conditions for criminal liability are satisfied, the matter may also be dealt with in accordance with the law. For conduct occurring outside China, the conditions for applying Article 40 of the Anti-Unfair Competition Law and other relevant provisions must also be examined.
3. The infringing conduct also endangers national interests or poses an actual threat to them.
If, in the above scenario, the process concerned involves critical production capacity, and specific facts indicate that its unlawful acquisition, disclosure, or use would endanger China’s national security or development interests, or pose an actual threat to them, the conduct may fall within the scope of the Special Provisions. In such circumstances, the Ministry of Commerce may assess whether to take corresponding measures under the proposed mechanism, while existing legal remedies may also apply subject to their respective conditions.
These scenarios show that the key to understanding the Draft lies in separately examining whether trade secret infringement is established and whether the additional conditions for triggering the special mechanism are met.
II. Potential Implications: Extending Risk Assessments to Business Arrangements in China
(I) Trade and Investment Measures May Affect Ongoing Operations and New Projects
Article 5 provides that the Ministry of Commerce may take one or more measures, including restricting or prohibiting the foreign entities concerned from engaging in imports and exports of goods and technology and international trade in services involving China, prohibiting the export of relevant items to them, and restricting or prohibiting their new investment within China. These provisions mean that the risks concerned may extend to ongoing transactions and investment plans involving China and the entities concerned. Corporate legal teams should work with business, supply chain, and investment teams to map trading relationships with China, identify the dependence of key items, technology licenses, service arrangements, and proposed investment projects on particular group entities, and assess the impact of business disruptions on contractual performance.
In addition, the wording of the investment measures is limited to “new investment” within China and should not be directly construed as authorizing measures to dispose of existing investments. However, whether “new investment” covers particular capital increases, mergers and acquisitions, or reinvestment arrangements has yet to be further specified. For significant projects under planning, enterprises should continue to monitor relevant interpretations and carefully formulate provisions in transaction documents concerning regulatory changes, restrictions on performance, and closing conditions. Such contractual arrangements can help allocate risks but cannot substitute for compliance with specific regulatory decisions.
(II) Personnel Measures and Other Measures Need to Be Incorporated into Business Continuity Management
Article 5 also provides for restricting or prohibiting the entry into China of relevant personnel, means of transport, and the like; restricting or revoking relevant personnel’s work permits or eligibility to stay or reside in China; and imposing fines and taking other necessary measures in accordance with the law. For enterprises that rely on overseas management and technical personnel traveling to China to perform their duties, personnel measures may affect project implementation, technical support, and day-to-day management. Enterprises may establish arrangements for authorized substitutes and handovers for key positions to reduce their business dependence on the cross-border movement of individual personnel. Meanwhile, the scope of “relevant personnel” and their connection to the infringing conduct remain to be clarified, and it should not be presumed on this basis that all employees or management personnel will be subject to restrictions.
In addition, the provision on fines does not yet specify their amounts or calculation methods, and the limits of other necessary measures must also be assessed by reference to the corresponding legal bases and formal implementation arrangements. In internal reporting, enterprises should distinguish between measures expressly provided for in the text, issues awaiting clarification, and their own scenario assumptions, so as to avoid presenting potential risks as inevitable outcomes.
III. Procedural Arrangements: Participation in Investigations, Adjustment of Measures, and Transaction Exemptions
(I) Cooperation with Investigations and Protection of Information
Article 6 provides that the Ministry of Commerce may conduct relevant investigations, that foreign entities under investigation shall truthfully provide information and materials, and that they have the right to make statements and present arguments in their defense. Where an entity fails to cooperate with or obstructs an investigation, the Ministry of Commerce may make a decision on the basis of the facts available. Article 4 also expressly provides that the relevant departments and their staff are under a duty to maintain the confidentiality of trade secrets and other information obtained in the course of their work.
Enterprises may have their legal teams coordinate with the relevant teams to compile materials concerning the sources of information, the scope of authorization, and actual use, and to provide a full account of the facts and their positions. When submitting materials, they may identify confidential content and communicate with the competent authorities regarding appropriate confidential treatment, so as to accommodate both cooperation with the investigation and protection of information.
(II) Adjustment of Measures in Light of Remedial Action
Article 7 provides a clear avenue for the adjustment of measures. A foreign entity that takes the initiative to rectify its conduct, ceases the infringement and eliminates the danger, and compensates for losses may apply for the measures to be modified or lifted. The Ministry of Commerce may, upon application or in light of the actual circumstances, assess the effects of implementation and decide to maintain, suspend, modify, or lift the measures.
These provisions allow measures to be adjusted dynamically in light of subsequent developments. Enterprises may take remedial action tailored to the specific matters concerned and use corresponding records to demonstrate the effects of corrective and remedial efforts. Settlement and compensation arrangements reached with the rights holder may serve as relevant supporting materials, while the decision on whether to adjust the measures remains with the Ministry of Commerce, based on its assessment.
(III) Transaction Exemptions in Special Circumstances
Article 9 preserves the possibility of applications on a case-by-case basis for necessary transactions. Where, in special circumstances, Chinese enterprises, other organizations, or individuals have a genuine need to transact with a foreign entity subject to measures, they may explain the facts and reasons to the Ministry of Commerce and, upon approval, conduct the corresponding transactions or supply the relevant items.
For the business concerned, enterprises may first ascertain the scope of the specific measures, after which an eligible Chinese party to the transaction may apply for an exemption and proceed within the scope of the approval. This mechanism helps accommodate actual transactional needs during the implementation of measures, and subsequent provisions concerning its application requirements and procedures warrant continued attention.
Conclusion
The Draft seeks to improve the protection of trade secrets in matters involving foreign elements under the existing legal framework and to accommodate both the protection of rights and actual business needs through arrangements for participation in investigations, adjustment of measures, and transaction exemptions. The provisions are currently at the public consultation stage, and the specific standards and procedures for their application remain to be further clarified.
Foreign enterprises investing in China may, in conjunction with their existing compliance systems, make appropriate improvements to the management of trade secret authorization, use, and sharing within their corporate groups, and raise concerns and suggestions arising from business practice through the public consultation process. Continued attention to the final text and implementation arrangements will help enterprises accurately understand the requirements of the regime and properly conduct technology cooperation and day-to-day operations.