Under China’s draft trade secret rules, a foreign entity’s infringement of Chinese trade secrets in international economic, trade and related activities could attract trade, investment and personnel measures if it also endangers, or poses a real threat to, China’s national sovereignty, security or development interests. The proposal remains a consultation draft.
The Ministry of Commerce (MOFCOM) published the Special Provisions on Protecting Chinese Trade Secrets (Draft for Comment) on 26 October 2026. Comments close on 24 November 2026. The ten-article text may change before it is finalised.
Businesses sharing technology with mainland partners should use the consultation period to check where their information came from and how a restriction affecting a counterparty could disrupt a contract. For a group managing product development from Hong Kong, useful records include licences, dated design files and the permissions governing shared systems.
When the proposed rules would apply
Article 2 contains a cumulative trigger. A foreign entity must engage in conduct infringing Chinese trade secrets in international economic, trade and related activities. That conduct must also endanger China’s national sovereignty, security or development interests, or pose a real threat to them. An allegation of trade secret infringement alone would therefore not satisfy the stated conditions.
Article 3 defines a foreign entity to include a foreign enterprise, other organisation or individual. A rights holder includes both the owner of a trade secret and a person licensed by that owner to use it. The draft does not define “Chinese trade secrets” or provide a detailed test for the national-interest conditions. A Hong Kong connection alone does not resolve whether a particular entity falls within the proposed regime. These questions require advice on the relevant facts and PRC law.
The six measures MOFCOM could impose
If Article 2 applies, Article 5 would let MOFCOM impose one or more of six measures:
- Restrict or prohibit China-related imports and exports of goods and technology and international trade in services, and prohibit exports of relevant items to the entity.
- Restrict or prohibit the entity’s new investment in China.
- Restrict or prohibit entry by its relevant personnel and means of transport.
- Restrict or cancel relevant personnel’s work permits and stay or residence status in China.
- Impose fines in accordance with law, in an amount reflecting the seriousness of the circumstances.
- Take other necessary measures.
MOFCOM and the relevant departments would implement these measures within their respective powers and in accordance with law. Relevant enterprises, organisations and individuals would have to cooperate. Article 5 does not state a numerical fine range.
The commercial effect could extend to counterparties. Under Article 9, a Chinese enterprise, organisation or individual that needs, in special circumstances, to transact with an entity subject to Article 5 measures would have to apply to MOFCOM, provide the facts and reasons, and obtain consent before undertaking the corresponding transaction or supplying relevant items. A contract cannot itself provide that consent.
Investigation and changes to measures
Article 6 would allow MOFCOM to investigate whether the relevant conduct endangers China’s national sovereignty, security or development interests. An entity under investigation would have to cooperate, answer questions truthfully and supply relevant materials. It could also make representations and present a defence. If it failed to cooperate or obstructed the investigation, MOFCOM could decide on the facts already obtained. Enterprises, other organisations and individuals could submit suggestions or reports about a foreign entity’s infringement.
Article 7 provides a route to seek a change or cancellation of measures. An entity that voluntarily takes corrective action, stops the infringement, removes the danger and compensates losses could apply with supporting facts and reasons. MOFCOM could assess the measures’ implementation and effects, either following an application or in light of the circumstances, and decide to maintain, suspend, vary or cancel them. Corrective action would not guarantee relief.
Under Article 8, decisions to investigate, impose measures, or maintain, suspend, vary or cancel them would be publicly announced, unless laws or administrative regulations provide otherwise. Article 4 separately requires MOFCOM, the relevant departments and their staff to keep state secrets, trade secrets and similar information confidential in accordance with law. Businesses would still need to identify sensitive material carefully when preparing a response. Article 10 proposes commencement on publication of the final provisions; it does not make the consultation draft operative.
How the draft fits existing trade secret laws
The Anti-Unfair Competition Law, in force in its revised form since 15 October 2025, remains the general framework for administrative enforcement and civil remedies. Article 10 defines trade secrets as technical, business and other commercial information that is not publicly known, has commercial value and is subject to confidentiality measures taken by the rights holder. It prohibits specified forms of improper acquisition, disclosure and use, including certain conduct by third parties who know or should know of infringement.
The State Administration for Market Regulation (SAMR) issued the Provisions on the Protection of Trade Secrets, Order No. 126, effective since 1 June 2026. These provide detailed administrative enforcement rules. Article 5 expressly includes data, algorithms, computer programs and code as technical information. Article 9 lists confidentiality measures for remote working, cross-border collaboration and employee departures. Under Article 15, independent development, reverse engineering of products obtained through public channels, and use of a former employee’s general skills and experience are, in general, outside trade secret infringement.
The Foreign Trade Law, effective since 1 March 2026, already permits restrictions on China-related trade by overseas persons and organisations in specified circumstances. Article 40 also prohibits services that help evade those measures. The MOFCOM draft expressly cites that law and the Anti-Unfair Competition Law as legal bases. Its proposed measures would be subject to Article 2’s additional conditions, alongside the existing administrative and civil processes. Foreign-invested enterprises can also use the existing trade secret framework to protect their own information.
What businesses should review during the consultation
Start with the origin of information. Dated design files, version histories, licences and records of separate development can help explain why a business lawfully holds or uses technology. Article 39 of the Anti-Unfair Competition Law contains civil evidential rules; Article 20 of Order No. 126 deals with administrative enforcement. Under these rules, an alleged infringer may need to rebut specified evidence. Keeping these records is useful preparation for a dispute.
Then check access in practice. A confidentiality clause is useful, but the company should also be able to show who could open a design file, what a supplier was permitted to retain and what happened to an employee’s access when they left. Joint ventures, licensing arrangements, supplier reviews and acquisition data rooms need permissions that match the purpose for which information is shared.
For China-related contracts, identify who would check any announced measures, whether MOFCOM Article 9 consent might be needed and which provisions govern delayed or prohibited performance. Performance, termination and change-in-law clauses deserve attention before a restriction affects a delivery or service obligation.
The consultation notice sets out how to submit comments by 24 November 2026. Businesses can use that period to identify questions for PRC counsel while checking the records and contracts they would need if a dispute arose. TITUS can advise on the Hong Kong-law aspects of commercial contracts and employment confidentiality arrangements.
For advice on Hong Kong-law contract and confidentiality questions, contact TITUS.
This article provides general information only and does not constitute legal advice or create a solicitor-client relationship. TITUS advises on Hong Kong law; questions concerning these PRC instruments should be referred to lawyers qualified in that jurisdiction. It reflects the instruments discussed as at 27 October 2026. The draft may change. English translations and descriptions are for reference only; the Chinese texts should be consulted.