China is proposing a trade-secret-specific route to penalties already available under its foreign-company blacklist system, including bans on personnel entering the country and the cancellation of work permits.
The Ministry of Commerce released a 10-article draft Monday that would permit action against foreign businesses, organizations, and individuals involved in infringing Chinese trade secrets when the conduct also threatens the country’s sovereignty, security, or development interests. Public consultation runs through November 24.
Under Article 5, the ministry could restrict imports, exports, technology transactions, and international services trade involving China. It could also block new investments, prohibit the entry of associated personnel or transportation equipment, revoke permission to work or reside in China, and impose fines.
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Unlike an ordinary damages dispute, the proposed response could therefore affect a company’s commercial operations and the legal status of people connected to it.
The draft does not yet specify fine amounts or identify any company facing penalties.
Much of the penalty language resembles China’s Unreliable Entity List rules introduced in September 2020. Those regulations allow similar restrictions after a foreign entity is added to the list.
The older system covers conduct threatening China’s national interests, as well as certain discriminatory commercial actions against Chinese parties. The new draft instead identifies infringement of Chinese trade secrets, together with a national-interest threat, as the trigger. It gives the Commerce Ministry authority to decide on restrictions without specifying that the affected entity must first be placed on the Unreliable Entity List.
The proposal provides for investigations in which foreign entities must answer inquiries and submit relevant information. They may present explanations and defenses. If they refuse to cooperate or obstruct the inquiry, the ministry may decide using facts already obtained, according to Article 6.
On the other hand, Article 7 would allow restricted entities to request changes or removal of measures after taking corrective steps, ending the infringement, addressing risks, and compensating losses. Chinese firms needing to continue particular transactions could seek ministry approval under Article 9.
China already enforces trade-secret protections through separate domestic rules, including regulations that took effect on June 1, 2026. The latest proposal would add a framework aimed specifically at foreign entities whose conduct also meets the national-interest test.
