China issues new supply chain rules targeting foreign disruption
New rules let the authorities probe foreign entities for discriminatory bans or supply chain security threats
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[BEIJING] China will set up a sweeping new mechanism to ensure the security of its supply chains, targeting espionage and allowing Beijing to retaliate against foreign entities if they impose curbs on trade, according to a directive released by the State Council on Tuesday (Apr 7).
The new rules give government agencies the authority to start security probes against foreign nations and international organisations if they “adopt discriminatory bans and other similar measures” against China, or if they carry out actions that harm the security of the country’s supply chains.
The regulations, signed by Premier Li Qiang, also allow the government to target foreign organisations and individuals if they suspend normal trade with China in violation of market rules.
“Part of the intent is clearly to provide another legal basis for officials to respond to foreign sanctions, export controls or other restrictions on China,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics. “It’s part of a broader build-out of laws and regulations that has been underway for years.”
Retaliatory measures include banning the import or export of goods, technologies and services, as well as charging special fees. Foreign entities and individuals could also be barred from entering, investing and transacting in China.
China will also establish an early-warning system for supply chain security, whereby agencies assess the stability of supply for raw materials, technologies, equipment and products in key sectors, and identify risks in a timely manner.
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The provisions also contain a pledge to target “information collection activities” on supply chains within the country that violate Chinese laws and regulations, without elaborating. BLOOMBERG
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