China Commits to Securing Global Supply Chains

China has implemented its first comprehensive regulatory framework for industrial and supply chain security, elevating the protection of these networks to a matter of national security. The Regulations on Industrial and Supply Chain Security, published by the State Council on April 7, 2026, took effect immediately upon publication without a transition period.

The 18-article regulations were signed by Premier Li Qiang. According to official government documentation, the rules are designed to prevent security risks, enhance resilience, and safeguard national security as well as economic and social stability.

National Security Integration and Coordination

The new framework transforms the safeguarding of China’s industrial and supply chains into a national security issue. It integrates previously disparate legal tools, including anti-sanctions provisions and export controls, into a unified regulatory system for oversight, and response.

To manage this framework, the regulations establish a centralized coordination mechanism involving more than 15 government agencies. This group includes the Ministry of Commerce (MOFCOM), the Ministry of Industry and Information Technology (MIIT), and the Cyberspace Administration of China (CAC), which will collectively monitor supply chain activities.

The regulations mandate that national and local authorities ensure the stable, continuous flow and production of technologies, equipment, products, and raw materials within key sectors. This will be achieved through risk monitoring, information sharing, and emergency management. Authorities are also tasked with creating a list of sectors vital to national security and strengthening the capacity and strategic reserves of goods to allow for emergency deployment during crises.

Investigation Mechanisms and Countermeasures

The regulations introduce a security investigation mechanism that allows the state to respond to external threats. Under Articles 14 and 15, the State Council and related departments are empowered to launch investigations into external actions that endanger China’s industrial and supply chains.

These investigations may target foreign countries, regions, international organizations, foreign organizations, or individuals. Specific triggers for these investigations include discriminatory bans or restrictions and the suspending [of] normal business transactions. The government may take countermeasures against entities found to be undermining the security of these chains.

Impact on Multinational Corporations

For multinational companies (MNCs), the regulations expand the scope of regulatory scrutiny. Beyond government-led measures, the framework now covers commercial conduct that could be interpreted as affecting supply chain stability, particularly when such conduct has a material impact on critical supply chain nodes or Chinese counterparties.

Specific risks for businesses include:

• Decisions to exit China-related supply chains or stop supplying Chinese customers may be viewed as risk triggers.
• New restrictions on the collection of supply chain data have been imposed, which may affect how companies conduct supply chain audits and environmental, social, and governance (ESG) diligence within China.
• Companies may face direct legal conflicts if complying with European Union or United States laws triggers enforcement risks under the new Chinese regulations.

Legal experts have noted significant interpretive uncertainty regarding the regulations, as key terms such as discriminatory measures and interrupts normal transactions remain undefined.

Rare Earth Exports and Global Stability

Alongside the implementation of these security rules, China has stated its commitment to safeguarding the stability and security of global industrial and supply chains. As part of this approach, the government indicated that export requests for rare earths qualified for civil use will be approved.

This move aligns with the principles outlined in the regulations to promote the stable and smooth functioning of global industrial and supply chains while simultaneously supporting core technology research in key domestic sectors.