On December 27, 2025, China’s Standing Committee of the National People’s Congress adopted a sweeping revision to the country’s Foreign Trade Law, the most significant update since the law was comprehensively overhauled in 2004 to align with WTO commitments.

In this guide, we look at what international businesses need to know about the new Foreign Trade Law.

Why China Revised Its Foreign Trade Law

The 2004 version of the Foreign Trade Law was designed primarily to facilitate China’s integration into the global trading system following its WTO accession in 2001. That framework focused on market opening, trade promotion, and aligning domestic regulations with international norms.

Two decades later, the geopolitical and economic context has shifted dramatically. New trade relationships with the United States and European Union, tightening technology export controls, and a growing emphasis on self-reliance in critical supply chains have all contributed to Beijing’s decision to modernize its trade law toolkit. The revised law reflects China’s dual-track approach: continuing to promote trade openness in certain sectors while building a stronger legal foundation for protecting national interests. Companies considering market entry into China will need to understand both sides of this equation.

National Security as a Core Trade Objective

Perhaps the most consequential change in the revised law is the elevation of national security to a primary objective. For the first time, “maintaining national sovereignty, security, and development interests” sits alongside trade facilitation as a stated purpose of the Foreign Trade Law.

In practice, this means that trade policy decisions may increasingly be evaluated through a security lens. Sectors deemed strategically important, semiconductors, aerospace, advanced manufacturing, critical minerals, are likely to face heightened scrutiny. For foreign companies operating in these areas, particularly those structured as a Foreign Invested Enterprise (FIE), the shift signals a need to anticipate more rigorous government oversight of cross-border transactions.

Expanded Countermeasures Authority

The revised law significantly broadens the Ministry of Commerce’s (MOFCOM) authority to assess foreign trade policies and impose countermeasures. Under the new framework, MOFCOM can evaluate other countries’ trade policies “as needed” rather than only in response to specific disputes—a notable expansion of discretionary power.

More significantly, the law now authorizes actions against non-Chinese entities and individuals who discontinue “normal transactions” with Chinese companies. This provision appears designed to address scenarios where foreign firms comply with third-country sanctions or export controls that restrict business with Chinese counterparts. The law goes beyond traditional import and export restrictions, permitting “other necessary measures” that give authorities considerable latitude.

For businesses navigating export and import licensing requirements in China, the expanded countermeasures toolkit adds a layer of uncertainty. Companies that comply with one jurisdiction’s restrictions may find themselves exposed to regulatory action in another—a challenge that demands careful legal planning across all markets of operation.

A Dedicated Intellectual Property Chapter

The revised Foreign Trade Law introduces a standalone chapter on intellectual property, marking a significant development for IP-intensive industries. The new provisions establish trade-related sanctions for IP infringement that endangers foreign trade order, targeting practices such as standard validity challenge clauses and portfolio license bundling.

The IP chapter also includes a reciprocity mechanism: if Chinese intellectual property is not adequately protected overseas, the law permits retaliatory measures. This cuts both ways for foreign companies. On one hand, businesses operating in China may benefit from stronger IP enforcement domestically. On the other, companies must ensure their own IP practices—particularly around licensing and technology transfer—are fully compliant with the new requirements.

For companies concerned about protecting their innovations in China, understanding the intersection of IP law and trade regulation has become essential. The copyright registration process in China and trademark registration remain foundational steps, but the revised law adds trade-specific dimensions that require additional attention.

Digital Trade and Green Trade Frameworks

Looking beyond restrictions, the revised law also opens new avenues for international commerce. It establishes frameworks for promoting cross-border financial services systems, advancing international mutual recognition of digital certificates and electronic signatures, and developing standards for green trade—including certification and labeling systems.

The law introduces a negative list management system for cross-border trade in services, providing greater clarity on which service sectors are open to foreign participation and which remain restricted. For companies in digital, fintech, or sustainability-focused industries, these provisions may create meaningful new market opportunities, provided they can navigate the compliance requirements that accompany them.

Export Control Expansion

The revised law tightens authority over exports of strategic goods, including critical minerals and dual-use items. Notably, the scope extends beyond items directly involving Chinese companies—any transactions involving items subject to Chinese export controls may fall within regulatory reach, regardless of the nationality of the parties involved.

This extraterritorial dimension mirrors approaches taken by other major economies but creates additional complexity for multinational supply chains. Companies that source materials, components, or technology from China—or that have Chinese suppliers or partners in their value chain—should conduct a thorough review of their exposure to the expanded export control regime.

Businesses already managing beneficial ownership reporting requirements and other compliance obligations in China will find that the export control provisions add yet another layer to their regulatory burden.

Supply Chain Stabilization Measures

Recognizing the disruption that trade tensions and policy shifts can cause, the revised law introduces a trade adjustment assistance system designed to stabilize industrial and supply chains. While the details of implementation remain to be seen, the provision signals Beijing’s awareness that abrupt regulatory changes can harm domestic industries as much as foreign ones.

For international businesses, this suggests a degree of pragmatism in how the new rules will be enforced. Companies that maintain transparent operations, strong compliance frameworks, and constructive relationships with Chinese regulatory authorities may find that the adjustment mechanisms provide a buffer during transitional periods.

What International Businesses Should Do Now

The revised Foreign Trade Law is already in effect, and its implications will unfold over the coming months as implementing regulations are issued and enforcement patterns emerge. Here are the key steps international businesses should consider:

Conduct a compliance audit. Review your supply chains, export practices, and procurement arrangements to assess alignment with the expanded definition of controlled items and the new countermeasures framework. Companies structured as a Wholly Foreign-Owned Enterprise (WFOE) or joint venture should pay particular attention to how the new rules affect their specific entity type.
Strengthen your IP strategy. Evaluate your licensing arrangements, technology transfer agreements, and IP protection protocols in light of the new trade-related IP provisions. Ensure registrations are current and enforceable.
Establish specialized legal oversight. The intersection of export controls, IP rules, countermeasures, and data governance under the revised law is complex enough to warrant dedicated legal counsel familiar with Chinese trade regulations.
Monitor countermeasures developments. Track which countries and sectors China targets with countermeasures to assess potential ripple effects on your operations. This is especially relevant for companies caught between competing regulatory regimes.
Reassess your China entity structure. The new regulatory environment may affect the suitability of your current corporate structure in China. Whether you operate through a branch office, representative office, or subsidiary, it is worth evaluating whether your setup remains optimal under the revised framework. Our Doing Business in China guide provides a comprehensive overview of available entity structures.
Review tax and financial compliance. While the Foreign Trade Law is primarily about trade regulation, its interaction with China’s tax filing system and broader regulatory environment means that changes in one area can have cascading effects on others. Ensuring your financial compliance is robust provides a stronger foundation for navigating trade-related regulatory shifts.

Ensure Foreign Trade Law Compliance, with MSA Asia

For international businesses, the revised foreign trade law means that operating in China, or any major market, requires a more sophisticated understanding of regulatory risk than ever before. To ensure your business is compliant, get in touch with MSA for a comprehensive compliance audit.