Interpretation of the "Provisions of the State Council on the Security of Industrial and Supply Chains"
发布日期：2026-06-30
作者： 孙庆南,袁梦
Interpretation of the “Provisions of the State Council on the Security of Industrial and Supply Chains”: New Requirements for Chinese Enterprises’ Supply Chain Compliance Systems
At present, the global industrial chain landscape is undergoing profound transformation, and risk factors relating to supply chain security in the international economic and trade environment are markedly increasing. In recent years, major economies worldwide have strengthened legislation and regulatory oversight in the field of industrial chain and supply chain security. The United States has continuously adjusted export control rules in cutting-edge technology sectors such as semiconductors, artificial intelligence, and quantum computing, and has repeatedly revised its “Entity List”; the European Union has successively introduced legal instruments such as the Critical Raw Materials Act, the Corporate Sustainability Due Diligence Directive (CSDDD), and the Regulation on Prohibiting Products Made with Forced Labour, strengthening supply chain due diligence and traceability requirements, and conducting anti-subsidy investigations in sectors such as new energy and electric vehicles. These measures, combined with the restructuring of global industrial chains, have created new uncertainties in the external environment of supply chains for Chinese enterprises in areas such as key technologies and strategic raw materials.
From the perspective of China's domestic legal system, before the promulgation of the Provisions of the State Council on the Security of Industrial and Supply Chains (the "Provisions"), norms relevant to safeguarding industrial and supply chain security were scattered across multiple laws and administrative regulations, including the National Security Law, the Emergency Response Law, the Export Control Law, the Anti-Foreign Sanctions Law, and the Data Security Law. Although systems such as emergency support, export control, and countermeasures had already been preliminarily established, the relevant provisions were dispersed across numerous laws and regulations, lacking overall coordination, and China lacked a comprehensive administrative regulation dedicated specifically to industrial and supply chain security that could coordinate the responsibilities of different departments and cover the full chain of risk prevention and control. Against this backdrop, the Provisions were promulgated and took effect on March 31, 2026. As China's first administrative regulation dedicated specifically to regulating industrial and supply chain security, the Provisions consist of eighteen articles in total, systematically constructing a governance system for the security of industrial and supply chains in key sectors, and expressly extending trade-investigation and countermeasure mechanisms to the industrial and supply chain dimension — thereby having a substantive impact on Chinese enterprises.
This article provides an overview of the Provisions in three parts: the main content of the Provisions, the impact of the Provisions on Chinese enterprises, and recommendations for Chinese enterprises.
1 Main Content of the Provisions
1.1 Establishing a Security System for Industrial and Supply Chains in Key Sector
Under Article 7 of the Provisions, relevant State Council departments will focus on sectors bearing on economic and social stability and national security, and formulate a dynamically adjusted list of key sectors. As of now, this list of key sectors has not yet been published, but the relevant arrangements outlined in the 15th Five-Year Plan already shed light on which sectors the Chinese government's industrial blueprint may regard as key.
First, the outline expressly calls for tackling core weak links across the entire chain through "extraordinary measures," covering areas such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and biomanufacturing. These are areas with high external dependence and constrained access to technology, and therefore have a relatively high likelihood of being added to the list. Second, the outline also lays out strategic frontier sectors, including artificial intelligence, quantum technology, biotechnology, and new energy, and simultaneously calls for "establishing a national list of key and emerging technologies." Given the forward-looking strategic significance of supply chain security in these frontier sectors, it is worth watching whether they will be incorporated in subsequent dynamic adjustments. Of course, the final scope will still be governed by the official list to be issued by the relevant State Council departments.
Building on the list, the Provisions establish a complete risk-regulation system: for example, the Provisions mention promoting the development of information-sharing platforms and guiding stronger interconnectivity between industries and enterprises; establishing a risk-monitoring and early-warning system, under which assessments and monitoring will be organized regarding the stability of supply channels in key sectors, early-warning information will be issued in a timely manner, and enterprises, industry associations, and chambers of commerce are encouraged to proactively report identified supply chain security risks; the Provisions also mention establishing a risk-prevention system, organizing the build-up of physical reserves and capacity reserves in key sectors; and establishing an emergency-management system, authorizing the state, in extreme circumstances, to adopt emergency response measures such as emergency dispatch, drawing on reserves, and organizing production, transport, and supply, with relevant organizations and individuals required to cooperate.
Taking the key-sectors list as its entry point, the above system forms a progressive governance chain of "information sharing — risk monitoring — risk prevention — emergency response." This institutional design reflects a shift in governance philosophy from reactive, after-the-fact response toward proactive, before-the-fact prevention, and provides full-process institutional support for the security of industrial and supply chains in key sectors.
1.2 Restricting Information-Gathering Activities Within China
With respect to information gathering, the Provisions expressly state that no organization or individual may, in violation of China's laws, administrative regulations, departmental rules, or relevant state provisions, carry out information-gathering activities, such as surveys related to industrial and supply chains, within Chinese territory.
This provision is a linking clause: it does not itself directly enumerate prohibitions on information gathering, but instead refers back to prohibitions and controls on specific information-gathering conduct that already exist under the current legal system, that is, compliance is required with the relevant provisions of the National Security Law, the Law on Guarding State Secrets, the Data Security Law, the Personal Information Protection Law, and similar laws.
1.3 Application of Countermeasures to Industrial and Supply Chains in Key Sectors
The Provisions build a countermeasure framework from two angles: foreign-related entities and domestic entities.
At the level of foreign-related entities, looking at both foreign state actors and non-state actors, where a foreign state, region, international organization, or individual implements or assists in implementing conduct that harms the security of China's industrial and supply chains, the relevant authorities are empowered to conduct security investigations and adopt measures such as restrictions on the import and export of goods, restrictions on investment, restrictions on transactions and cooperation, and restrictions on entry into China; such measures may also be extended to organizations actually controlled by, or established or operated with the participation of the relevant entity. This directly addresses trade controls, sanctions, and similar measures from Europe and the United States.
The Provisions clarify the compliance obligations of domestic entities. Once the relevant State Council departments, having conducted a security investigation into discriminatory measures by a foreign country or international organization, or into conduct such as a supply cut-off by a foreign organization or individual, decide to adopt countermeasures, organizations and individuals within Chinese territory must comply. Violators face being ordered to make corrections, as well as being prohibited or restricted from engaging in government procurement, bidding and tendering, the import and export of goods and technology, international trade in services, cross-border data transfers, and departure from, or stay/residence within, China.
The above provisions distinguish the targets of regulation by the type of actor involved, forming a complete loop running from external countermeasures to internal enforcement. For discriminatory measures by foreign governments, and for supply cut-offs or discriminatory conduct by foreign commercial entities, the Provisions set out corresponding investigation procedures and countermeasure tools respectively, clearly addressing both "state conduct" and "market conduct," while on this basis also ensuring that countermeasures carry binding force on domestic entities.
2 Impact of the Provisions on Chinese Enterprises
The core institutional design of the Provisions is to "highlight priorities while taking overall considerations into account." Through the establishment of a "key sectors list" system, the Provisions provide concentrated, robust safeguards and regulation for core links bearing on national security and economic and social stability. This does not mean, however, that sectors outside the "key sectors" are entirely unaffected by the regulation.
2.1 Priority Control of Key Sectors
Most of the specific systems under the Provisions, such as risk monitoring and early warning, risk-prevention reserves, and emergency management, are explicitly built around "key sectors." This means that once an industry or link is included in the "key sectors list," it will face stricter and more systematic security review and regulation.
(a) Information Disclosure Obligations
To support the state's risk-monitoring, risk-prevention, and emergency-management systems, Chinese enterprises may be required to provide the government with necessary supply chain information, for example, current inventory levels, the distribution and capacity and reserve status of their suppliers, and real-time information on production, transport, and supply in extreme circumstances.
Although the specific scope, manner, and frequency of these information-provision obligations await further clarification through implementing rules, once the government makes a request, Chinese enterprises will need to respond promptly. At this stage, therefore, Chinese enterprises may wish to first complete a systematic inventory and classification of their internal supply chain data, clarifying which data constitute trade secrets, which can be provided after desensitization, and which must be provided to satisfy statutory obligations, so as to be able to respond quickly and in compliance once the system takes effect.
(b) Accepting Periodic Government Assessment and Monitoring of Supply Chain Stability
For Chinese enterprises included on the key-sectors list, the relevant State Council departments will assess and monitor the stability of supply channels for raw materials, technology, equipment, and products in key sectors, as well as their impact on economic and social stability and national security, and will issue early-warning information.
(c) Cooperating with Unified State Dispatch in Emergencies
Where circumstances arise that affect the security of industrial and supply chains in key sectors and endanger economic and social stability and national security, a Chinese enterprise's supply and production chain may be subject to emergency dispatch, and the Chinese enterprise has an obligation to cooperate with emergency response measures such as organizing production, transport, and supply.
This type of measure is a non-routine management measure, requiring a decision by the State Council or a department authorized by the State Council, and must be terminated promptly once the relevant grounds no longer exist. Nonetheless, Chinese enterprises should anticipate this institutional arrangement in their ordinary compliance work and incorporate it into the scope of their emergency-response plans.
2.2 Compliance Risks in Supply Chain Management
(a) Collecting and Providing Information at the Request of Overseas Parties
In practice, foreign headquarters or overseas customers often require Chinese enterprises to provide detailed supply chain information, including supplier directories, raw material sourcing locations, production-capacity layouts, and even cost data, in the form of ESG audits, conflict-minerals investigations, supplier compliance questionnaires, and the like.
Chinese enterprises need to conduct a review along two dimensions. First, whether the request may constitute a discriminatory measure. If the request is made on the basis of discriminatory legislation enacted by another country or organization against China, a Chinese enterprise's act of assisting in its implementation may be found to constitute "indirect participation" in discriminatory restrictive measures under Article 4 of the Anti-Foreign Sanctions Law, exposing the Chinese enterprise to the risk of being added to a countermeasures list, as well as to civil litigation risk brought by an aggrieved enterprise under Article 12 of the Anti-Foreign Sanctions Law.
Even where the overseas request does not itself constitute a discriminatory measure, a Chinese enterprise still retains the right to decide carefully, from its own compliance perspective, whether to cooperate. In routine commercial due diligence, the information requested by an overseas customer or headquarters may well exceed what is strictly necessary to perform the contract, or may involve categories of information specially protected under Chinese law. In such cases, a Chinese enterprise need not passively wait until the "overseas request is found unlawful" before refusing; rather, it may proactively, on the basis of Chinese law, set red lines on the provision of classified information, important data, and the like. This also lays a legal foundation for including a "lawful information provision clause" in future contract terms.
Second, Chinese enterprises also need to review, in accordance with current regulations, the type of information collected, the lawfulness of the means of collection, and any restrictions on providing such information overseas.
(b) Supplier Compliance Risk
The direct impact of the Provisions is that, because compliance requirements for enterprises across the supply chain have increased, the pool of qualified suppliers may shrink.
It is worth noting that supplier compliance risk has a transmission effect. If an upstream supplier suspends supply because it cooperates with a foreign discriminatory measure, or because it is itself placed on a countermeasures list, this will directly affect the production stability of downstream enterprises. Compared with a traditional commercially-motivated supply cut-off, the risk of a supply chain disruption in such circumstances is more sudden and its impact more severe.
2.3 Increased Trade Compliance Risk
Whether a foreign enterprise cuts off supply to a Chinese enterprise pursuant to the requirements of a foreign state's or organization's laws, or out of commercial considerations, if doing so violates normal principles of market transactions and causes, or threatens to cause, substantial harm to the security of China's industrial and supply chains, it may face a security investigation and subsequent countermeasures by the relevant Chinese authorities.
Under the Provisions, once such countermeasures are formally adopted, domestic Chinese enterprises become subject to a compliance obligation, for example, being prohibited under a transaction ban from continuing to transact or cooperate with the relevant counterparty. This means that Chinese domestic enterprises must assess both the impact of a supply cut-off on production and the lawfulness of the transaction from a compliance perspective. If the grounds for a cut-off trigger countermeasures, the Chinese enterprise must immediately implement the countermeasures in accordance with law, failing which it may face corresponding administrative measures.
3 Recommendations for Chinese Enterprises
Although the implementing rules and key-sectors list under the Provisions have not yet been issued, and enforcement practice remains to be seen, given the increasingly severe international political and economic landscape and the growing supply chain security risks in the international economic and trade environment, Chinese enterprises should nonetheless begin preparing early.
3.1 Monitor the Forthcoming Key-Sectors List and Implementing Rules
The key-sectors list has not yet been published, and specific operational standards, such as the scope and manner of information sharing, the frequency and procedures for risk assessment, and the triggering conditions for emergency requisition, await further clarification through subsequent implementing rules. This is the policy variable that Chinese enterprises most need to track at present.
It is recommended that Chinese enterprises closely monitor policy developments from the relevant State Council departments (in particular the Ministry of Industry and Information Technology), promptly confirm whether their own business falls within the sectors covered by the list, and assess accordingly any resulting changes to their compliance obligations. Pending the rollout of specific rules, enterprises' priority should be to take stock of their internal data assets and their current state of business compliance, leaving ample operational room for aligning with the system once it is implemented.
3.2 Improve the Information Security System
With respect to industrial and supply chains inquiries from foreign headquarters or foreign customers, Chinese enterprises need to carefully assess the potential risks in light of the Provisions. Specifically, a review framework can be built up progressively across three levels: first, determining whether the inquiry is based on discriminatory legislation enacted by a foreign country against China, whether it specifically targets Chinese supply chains, and whether it exceeds normal commercial needs; second, identifying whether the information involved falls within categories specially protected by law, such as state secrets, important data, personal information, or trade secrets; and third, assessing whether providing such information overseas would trigger compliance obligations such as a data export security assessment.
The core of this review mechanism is to embed legal compliance into the day-to-day business processes of supply chain management and customer response. Building and improving the information security system is foundational work that Chinese enterprises have long been pursuing on an ongoing basis, and is not a new requirement created by the Provisions. The significance of the Provisions lies in adding an industrial and supply chain security dimension to this existing system; Chinese enterprises should supplement their existing information security frameworks with heightened red-line awareness and assessment indicators regarding compliance in information gathering.
3.3 Ongoing Development of the Trade Control and Sanctions Compliance System
Trade compliance is a foundational compliance capability that Chinese enterprises should maintain on an ongoing basis. Chinese enterprises with cross-border business, regardless of how the Provisions are ultimately implemented, need to continuously monitor developments in China's countermeasures lists and sanctions measures, and embed screening procedures into routine business processes such as contract approval and payment, in order to guard against the risk of non-compliant transactions.
At the same time, when foreign enterprises make commercial decisions relating to Chinese domestic enterprises (including, without limitation, cutting off supply, restricting technology cooperation, or responding to a foreign discriminatory policy), they should assess whether such a decision could be found to "violate normal principles of market transactions by cutting off normal dealings with Chinese citizens or organizations," and whether it could cause, or threaten to cause, substantial harm to the security of China's industrial and supply chains, thereby triggering a security investigation and related countermeasures under the Provisions.
3.4 Establish Diversified Supply Channels
To reduce reliance on a single source, Chinese enterprises may consider proactively diversifying their supply chain layout and actively introducing alternative suppliers across multiple regions. This aligns not only with the policy direction set out in Article 4 of the Provisions, which "encourages and supports enterprises in developing diversified supply channels," but also serves Chinese enterprises' own interest in reducing supply risk.
Given that the Provisions further strengthen compliance requirements for Chinese enterprises, it is recommended that, in supplier management, compliance capability be incorporated into supplier assessments. For suppliers of critical materials in particular, Chinese enterprises should periodically assess whether they are affected by foreign discriminatory laws and whether there is a potential risk of a supply cut-off, and formulate tiered contingency-response plans accordingly.
3.5 Improving Commercial Contract Terms
It is recommended that Chinese enterprises revisit their commercial contract templates in light of the principles established under the Provisions, to determine whether revisions are needed to also address compliance requirements under Chinese law. For example:
First, force majeure clauses. Chinese enterprises may consider bringing within the scope of the force majeure clause an inability to perform contractual obligations resulting from "performance of statutory obligations under the Provisions and other relevant laws and regulations (including, without limitation, cooperating with government security investigations, accepting emergency dispatch, restrictions on the provision and collection of information, and implementation of countermeasures)," so as to relieve the Chinese enterprise from corresponding liability for breach.
Second, consider adding restrictive conditions on the provision of information. For example, providing that the provision of information shall be subject to compliance with Chinese laws, administrative regulations, departmental rules, and relevant state provisions. Where providing or collecting information could violate Chinese legal requirements, the Chinese enterprise is entitled to refuse to do so, and such refusal shall not constitute a breach of contract.
Third, upstream supply chain pass-through clauses. In contracts with downstream customers, Chinese enterprises may consider adding a clause providing that, where the Chinese enterprise is unable to deliver on time because upstream supplier conduct triggers Chinese countermeasure laws or involves cooperation with a foreign discriminatory measure, the Chinese enterprise shall be relieved of liability for breach, provided that it has made reasonable efforts to identify alternative suppliers.
4 Conclusion
The promulgation of the Provisions marks China's transition from a fragmented response to a new, institutionalized stage of prevention and control in the governance of industrial and supply chain security, and represents a major institutional arrangement by the state to coordinate development and security in the industrial and supply chain dimension.
For Chinese enterprises, in the short term this means a compliance task; but viewed over a longer horizon, it is also an important opportunity to rebuild their own supply chain resilience and risk resistance in an international economic and trade environment marked by markedly rising uncertainty. In this sense, compliance and competitiveness are not in conflict, Chinese enterprises that are able to internalize the security logic established under the Provisions into their day-to-day compliance processes, and integrate it into their supply chain layout and contract management, will not only be better positioned to meet regulatory requirements, but may also build forward-looking structural competitive advantages amid the accelerating restructuring of global industrial chains.
In an era that places equal emphasis on security and development, the building of supply chain compliance systems is moving from a back-office compliance function within Chinese enterprises to the forefront of strategic agendas.
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