China has proposed new rules allowing regime authorities to restrict foreign companies and individuals they accuse of stealing Chinese trade secrets, including through trade bans, investment restrictions, and limits on entry into the country.
Analysts told The Epoch Times that Beijing’s move is intended partly as a response to Washington’s recent sanctions and as a way to gain leverage in negotiations, while giving the regime greater power to use national security arguments in technology disputes.
The draft regulation, released by China’s Ministry of Commerce on Oct. 26, comes days after the United States sanctioned five Chinese companies over alleged theft of American trade secrets.
The proposed Special Provisions on the Protection of Chinese Trade Secrets are open for public comment until Nov. 24.
Under the 10-article draft, the ministry could investigate foreign companies, organizations, or individuals accused of infringing Chinese trade secrets in international economic and trade activities if their conduct is deemed to threaten China’s sovereignty, security, or development interests.
Possible penalties include restricting imports and exports of goods and technology, limiting international trade in services and new investment in China, barring individuals from entering the country, and restricting or revoking work permits and residency qualifications. Regime authorities could also impose fines.
The timing of the proposal was directly linked to escalating U.S. technology sanctions, according to Sun Kuo-hsiang, a professor in international affairs and business at Taiwan’s Nanhua University, who spoke with The Epoch Times.
“The United States sanctioned five Chinese companies on Oct. 19 on the grounds of trade secret theft. Beijing threatened on the 20th to take necessary measures, and released the draft on the 26th,” he said. “Judging from the timing, this move does indeed carry the intention of demonstrating to the United States its ability to take reciprocal countermeasures and increasing its leverage in diplomatic negotiations.”
Sun said Beijing also wanted to make trade secret protection an instrument of national security and technological competition.
Shen Ming-shih, a research fellow at Taiwan’s Institute for National Defense and Security Research, told The Epoch Times the proposal was mainly intended to demonstrate Beijing’s “tough stance” and “increase its bargaining leverage” amid intensifying geopolitical competition.
Shen said it would also provide a legal basis for responding to future international trade secret disputes and cross-border litigation.
Vague Definitions
The draft has drawn concerns over its broad language and the discretion it would give the Chinese regime.
It does not clearly define what constitutes an actual threat to China’s national interests or establish specific thresholds for determining when a trade secret violation warrants national security measures.
Sun said the draft left ambiguity around key legal standards and investigative procedures.
“Whether an infringement would rise to the level of national security, and what degree a ’threat’ must reach, are not clearly defined in the draft,” he said.
Without clear standards, transparent procedures, and effective avenues for appeal, the regulation could undermine foreign investor confidence, he added.
Shen said Chinese regulations frequently invoke concepts such as sovereignty, security, and national interests without providing particulars and definitions.
“This leaves law enforcement and administrative agencies with considerable room for interpretation, allowing them to enforce the rules flexibly according to political needs at the time,” he said.
Such uncertainty could increase operating risks for multinational companies and accelerate efforts to relocate parts of their supply chains away from China, Shen said.
Differences Between US and Chinese Rules
The proposal comes amid broader U.S.-China competition over technology and national security.
On Oct. 22, the U.S. Treasury Department proposed expanding its Outbound Investment Security Program to include biotechnology and broaden restrictions involving semiconductors, AI, quantum information, high-performance computing, and hypersonic systems.
Sun said both countries were expanding technology security controls, but their legal frameworks differed. He noted that U.S. law specifies conditions for identifying violations and requires reporting to Congress, while China’s draft provides fewer details on what constitutes a threat and how investigations should proceed.
Shen said that although the two countries’ measures had similarities in form and stated motivation, they differed fundamentally in their legal frameworks and enforcement.
He said U.S. laws provide clearer legal boundaries and avenues for legal challenge, whereas China’s draft would give the Ministry of Commerce broad authority to investigate, determine violations, issue decisions, and enforce restrictions.
Jon Sun and Luo Ya contributed to this report.
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