Civil Law

I. Introduction

On December 27, 2025, the Standing Committee of the National People’s Congress of the People’s Republic of China promulgated the newly revised Foreign Trade Law, which will take effect on March 1, 2026 (the “2025 FTL”). This legislative act marks a pivotal moment in China’s legal framework governing its economic interactions with the world. Since its initial enactment in 1994, China’s Foreign Trade Law (the “FTL”) has served as the fundamental statute regulating China’s import and export activities, foreign trade order, and related rights and obligations. It has undergone several amendments over the decades to adapt to the world’s evolving economic landscape and China’s deepening integration into the global economy. Among these changes, two revisions stand out as truly transformative: (i) the first major overhaul in 2004, which aligned China’s trade rules with its WTO accession commitments, and (ii) the 2025 FTL, which constitutes the second comprehensive and strategically significant update.

The 2025 FTL arrives at a critical juncture in global economic system. It unambiguously reaffirms the Chinese government and regulatory authorities’ steadfast commitment to the fundamental national policy of “opening-up.” However, this commitment is now expressed through a more sophisticated, rules-based, and proactive legal architecture designed to navigate an ever-evolving international environment. This environment is characterized by the resurgence of multilateral trade controls and geopolitical rivalries, increasingly complex and fragmented global supply chains, and the rapid emergence of novel trade forms propelled by the digital economy and artificial intelligence. The 2025 FTL is not merely an update; it is more of a strategic recalibration, positioning China to engage with the world from a position of growing strength, confidence, and a clear emphasis on sovereign legal governance, particularly in the ambit of intellectual property (“IP”).

The most significant and illuminating aspect of this revision lies in its enhanced provisions concerning IP protection in foreign trade. The addition of a new Article 33 in Chapter V, so named “Protection of Intellectual Property Rights Relating to Foreign Trade” and the enhancement of related clauses throughout the law signify a profound evolution in China’s approach. This evolution moves beyond passive compliance with international minimum standards towards active participation in shaping global IP norms, assertive protection of Chinese rights holders abroad, and the construction of a domestic legal regime capable of handling the intricate interplay between IP, trade, and national strategic interests. This article will provide a brief analysis of the 2025 Foreign Trade Law revision. It will explore the specifics and implications of its IP-related provisions, situate these changes within contemporary global trade disputes and systemic shifts, and outline the critical compliance imperatives it creates for both Chinese and foreign enterprises.

II. Background and Imperative for Change

China’s original FTL of 1994 was a product of its early reform and opening-up period, establishing a basic framework for managing a trade sector that was rapidly liberalizing from state monopoly. The 2004 revision was a direct and extensive response to the requirements of China’s membership in the World Trade Organization (“WTO”), which commenced in 2001. That amendment systematically incorporated WTO principles such as national treatment, most-favored-nation treatment (“MFN”), and transparency into domestic law. It also established legal mechanisms for trade remedy investigations (anti-dumping, countervailing, and safeguards) and introduced preliminary provisions on IPR protection in foreign trade, primarily aimed at prohibiting the trade in IP-infringing goods, consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”).

Within this volatile context, IP has moved from a peripheral trade issue to the very core of economic security and technological competition. IP is no longer just about protecting creative works or inventions; it is a strategic asset, particularly in the industrial sectors of semiconductors, information and communication technology (“ITC”), and biotechnology, determines control over critical technologies, dictates positioning in global value chains, and underpins national competitiveness. Developed economies, led by the U.S. and the EU, have long used robust IP regimes and aggressive trade tools like the U.S. Section 337 investigations and anti-trust investigations to maintain their technological edge and comparative advantages. Chinese companies, particularly during global business expansion, have consistently encountered various legal and regulatory challenges. For instance, enterprises from China frequently face costly IP litigation, exclusion orders, and market access restrictions abroad, which collectively place them in a comparatively disadvantaged position within the global economic landscape.

In addition, the global IP enforcement landscape has become a complex battlefield. In areas like Standard Essential Patents (“SEPs”) for telecommunications, litigation tactics have grown increasingly aggressive, with parties seeking anti-suit injunctions (“ASIs”) to paralyze parallel proceedings in other jurisdictions, leading to countermeasures like anti-anti-suit injunctions. These legal maneuvers transcend mere private disputes; they represent state-backed or state-tolerated strategies to assert jurisdictional dominance and influence global technical standards.

For instance, the 2025 WTO dispute between the European Union and China concerning anti-suit injunctions in SEP cases serves as a perfect real-time illustration of the principles underpinning the new law. The EU challenged China’s judicial practice of issuing ASIs, arguing it violated the TRIPS Agreement by undermining the rights of patent holders. China’s defense was robust, detailed, and grounded in a systematic interpretation of international law and the need to prevent jurisdictional abuse and ensure fair proceedings. In this case, China did not reject the WTO system. Instead, it engaged with it proficiently, while also supporting alternative mechanisms like the Multi-Party Interim Appeal Arbitration Arrangement (“MPIA”) to reform and sustain it. The upshot of the case is that the WTO panel dismissed the majority of the EU’s claims, finding that China’s measures in the specific cases presented did not constitute a violation of its TRIPS obligations. This portrays China as a “responsible stakeholder” seeking to reform, not dismantle, the system. The dispute moved China from a traditional defendant in WTO cases to a party actively shaping the interpretation of international rules in cutting-edge areas like SEP litigation and injunctive relief.

It is against this backdrop of external pressure, internal development needs, and a fragmented global rules-based order that the 2025 FTL was conceived. The law aims to provide Chinese enterprises with a stronger legal shield and sword in international trade, to safeguard China’s “developmental security” in key industries, and to articulate China’s vision for a more fair and equitable international trade system, which demands reciprocal treatment and a voice in rulemaking process.

III. The IP Revolution in Chapter V and 18-Article Regulation

One of the major changes in the 2025 FTL is the newly added Article 33 in Chapter V. It is not just an added clause, but also a programmatic statement of intent, providing that the state shall carry out international exchange and cooperation on intellectual property rights related to foreign trade, actively promote external negotiations on intellectual property rights related to foreign trade, establish and improve overseas intellectual property rights early-warning and rights protection assistance information platforms, and enhance the intellectual property rights compliance level and risk response capability of foreign trade operators.

This new provision outlines a comprehensive, four-pillar national strategy:

• International Engagement: Proactive participation in bilateral and multilateral IP dialogues and negotiations. This moves China from a rule-taker to a rule-shaper, seeking to influence international IP norms that reflect its interests.

• Diplomatic Negotiation: Using trade diplomacy to address systemic IP barriers faced by Chinese companies abroad, potentially linking market access issues to IP protection.

• Systemic Support Infrastructure: Building official “early-warning and rights protection assistance information platforms.” This signifies a state-backed effort to collect intelligence on overseas IP risks, legal changes, and potential disputes, providing actionable guidance to Chinese firms. It mirrors the kind of institutional support businesses in advanced economies have long enjoyed.

• Enterprise Capacity Building: Mandating the enhancement of IP compliance and risk management for all foreign trade operators. This creates a bottom-up pressure for Chinese companies to internalize IP best practices, moving away from a reactive, cost-driven approach to a strategic, proactive one.

On top of that, the 2025 FTL is closely related to the State Council Regulation on the Handling of Foreign-Related Intellectual Property Disputes (the “18-article IP Regulation”), which came into force on May 1, 2025. This 18-article IP Regulation operates at the administrative level, providing detailed procedures for the commerce department to handle foreign-related IP disputes that affect trade order.

The 2025 FTL elevates and enshrines these principles at the higher legislative level of the Standing Committee of the National People’s Congress. This creates a significant “closed-loop” system on legislation, detailed as the 18-article IP Regulation provides the detailed procedural regarding how investigations and measures will be taking, while the 2025 FTL provides the overarching statutory authority and policy consisting of the new strategic mandates of Article 33.

This two-tiered structure offers both flexibility and strength. The 18-article IP Regulation can be adjusted more readily to address emerging tactics, while the 2025 FTL can offer stable, high-level authority and direction. Together, they form a cohesive shield for the domestic market and a support mechanism for outbound investment, directly addressing the call for enhancing the autonomy, controllability, and resilience of industrial and supply chains.

IV. Clarifying the “China’s Section 337” Debate: Rule of Law versus Administrative Action

The enhanced IP enforcement powers have inevitably drawn comparisons to the United States’ Section 337 of the Tariff Act of 1930, a potent tool used by the U.S. International Trade Commission (“USITC”) to exclude IP-infringing imports through relatively fast administrative proceedings. Some commentators have prematurely labeled the new Chinese provisions as “China’s Section 337.”

This analogy, however, is somewhat misleading and overlooks fundamental philosophical and procedural differences. The U.S. Section 337 regime is fundamentally an administrative trade remedy process. While it adjudicates IP claims, its primary aim is to protect U.S. industries from “unfair acts” in importation. Its procedures are distinct from federal court litigation, often faster, and can result in general exclusion orders enforced by Customs. Its critics argue it can be used strategically to hinder competitors.

By contrast, the IP enforcement framework under China’s revised Foreign Trade Law is explicitly grounded in the principle of “rule of law” and reciprocity. Its stated foundation is the protection of “foreign trade order” and “fair competition,” not merely the interests of domestic rights holders. The law provides a legal basis for investigations and measures, but these are intended to operate within China’s established judicial and administrative system.

As mentioned above, the linkage between the 2025 FTL and the 18-article IP Regulation is crucial. According to Section 14 of the 18-article IP Regulation, the competent commerce department is entitled to investigate specific acts that harm trade order, which includes countries or regions that fail to provide adequate IP protection or national treatment to Chinese persons or goods. This creates a reciprocal or mirroring mechanism. Upon encountering systematic discriminatory treatment against Chinese rights holders in a foreign market, the Chinese government now possesses a clearer and more logically grounded legal mandate to investigate and, where appropriate, adopt proportionate measures against entities originating from that jurisdiction. This constitutes a calibrated instrument of diplomatic and legal leverage, designed to secure and promote mutual respect for IP rights. It also reflects China’s commitment to employing structured legal processes to respond systematically to violations of national treatment or MFN obligations.

V. Implications and Compliance Imperatives for Enterprises

The 2025 FTL creates a new operational reality for all businesses engaged in cross-border trade with China.

For Chinese Enterprises Going Global:

1. Strategic IP Transformation: The age of treating IP as an afterthought or a cost center has long gone. Companies must develop forward-looking, global IP portfolios. This includes proactive patent filings in key markets, rigorous freedom-to-operate (“FTO”) analyses, and sophisticated IP licensing schemes.

2. Leveraging State Resources: Enterprises must learn to actively utilize the new state-provided resources—the early-warning platforms, rights protection assistance, and training programs mandated by the 2025 FTL. Engaging with industry or trade associations and government-led IP initiatives becomes a strategic imperative.

3.Compliance as a Competitive Advantage: High levels of IP compliance and robust internal risk management systems are no longer optional. They are essential for mitigating risks abroad and for qualifying for potential state support. Understanding foreign laws on data, sanctions, and export controls is equally critical.

For Foreign Enterprises Entering the Chinese Market:

1. Revisit Chinese IP Policy: Foreign firms must understand that the new environment is not a simplistic copy of a U.S. regime, but a maturing, complex legal ecosystem. The focus should be on comprehensive compliance, not fear of an additional procedure.

2. Conduct Rigorous IP Due Diligence: Before entering the Chinese market, a thorough audit of the company’s own products, technologies, and brands is prerequisite. This includes:

• FTO Analysis: Ensuring products do not infringe valid Chinese IP rights including but not limited to patents, software copyrights, and trademarks. According to the World Intellectual Property Indicators 2025, China leads the world with 1.8 million patent applications.

• Registration and Protection: Securing Chinese IP rights (patents, trademarks, design patents) for core assets. It is noteworthy that China adopts a first-to-file system for both patents and trademarks, necessitating foreign enterprises seeking market entry to proactively formulate strategic IP protection measures in advance.

3. Embrace Holistic Compliance: Legal preparedness must extend beyond pure IP. A successful market entry strategy must integrate:

• Cybersecurity Law, Data Security Law, and PIPL^[1]: Ensuring strict compliance with data localization, cross-border transfer rules, and personal information handling standards. Data compliance is now inextricably linked to market access.

• Anti-Unfair Competition Law: Avoiding commercial disparagement, trade secret misappropriation, and confusing marketing practices.

• Anti-Monopoly Law: Being mindful of dominance, restrictive agreements, and merger control filings, especially in technology sectors.

4. Invest in Professional Expertise: Navigating this landscape requires specialized knowledge. Companies should either develop in-house legal and compliance teams with deep China expertise or retain reputable local law firms and consultants. The complexity of China’s legal environment now matches that of other major developed economies, treating it with less seriousness may pose a profound legal and compliance risk. 

VI. Conclusion

The 2025 FTL is a landmark event with far-reaching consequences. It is a definitive legislative declaration that China’s “opening-up” in the era of strategic competition will be guided by its own legal sovereignty, strategic interests, and a demand for reciprocity. By placing a supercharged focus on IP protection within the trade context, China is addressing a key vulnerability of its past development model while asserting its right to participate as an equal in shaping the global economic rules of the future. Particularly through Article 33, it establishes a state-backed, systematic approach to empowering Chinese enterprises on the global stage. Its integration with prior administrative regulations creates a formidable domestic legal toolkit.

In addition, the successful defensive outcomes achieved by both enterprises confronting foreign governmental trade sanctions and the national system within WTO proceedings demonstrate that China’s evolving IP and trade practices constitute a sophisticated and legally-articulated endeavor to advance its interests within the framework of existing international law, while concurrently developing domestic legal capacities commensurate with its economic standing.

For the global business community, the Chinese market remains open, but the terms of engagement are maturing rapidly. Compliance is no longer a bureaucratic hurdle but a strategic scheme. The 2025 FTL, especially its IP provisions, is not a wall but a gateway—one that requires a detailed map, expert guidance, and a profound respect for the complex and sophisticated legal system that now governs the world’s second-largest economy. In this business and legal dynamic, both Chinese and foreign enterprises should recognize and adeptly respond to this profound shift towards rules-based, IP-centric trade governance.

Note：

[1] PIPL stands for Personal Information Protection Law of the People’s Republic of China.

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