On June 24, 2026, the Ministry of Commerce (MOFCOM) issued Announcement No. 24 of 2026, formally promulgating the Measures for Industrial and Supply Chain Security Investigations [产业链供应链安全调查工作办法] (hereinafter referred to as the Measures). The Measures were enacted to implement the supply chain security investigation requirements of Order No. 834, Regulation on the Security of Industrial and Supply Chains [国务院关于产业链供应链安全的规定] (hereinafter referred to as the Regulation), which was issued by the State Council of the People’s Republic of China (State Council) on March 31, 2026. These rules, among other recent Chinese trade controls and countermeasures, were promulgated as a reaction to various sanctions, investigations and other trade restrictions imposed by the United States, the European Union (EU) and other countries and economies. Together, the Regulation and the Measures reflect China’s effort to close a perceived gap in its legislative and regulatory framework for addressing industrial and supply chain risks—an effort made more urgent by heightened global geopolitical uncertainty.

The Regulation and the Measures cite as their legal authority the National Security Law, the Foreign Relations Law, the Anti-Foreign Sanctions Law and the Foreign Trade Law. By grounding supply chain governance in China’s national security legislation, the Regulation and the Measures underscore China’s “security-first” approach to supply chain challenges. In effect, they reposition industrial and supply chain security squarely within national security, departing from the earlier practice of treating supply chain issues primarily as matters of economic or industrial policy.

The Regulation establishes a cross‑departmental coordination mechanism led by the State Council, with participation from multiple ministry‑level bodies—including the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Commerce, the General Administration of Customs and the Cyberspace Administration, among others. Provincial‑level governments, acting at the direction of the central government, are responsible for industrial and supply chain security within their jurisdictions. This arrangement reflects a whole‑of‑government approach to managing the complexity of securing China’s vast industrial and supply chains.

Article 6 of the Regulation requires government ministries and provincial authorities to issue additional regulations or administrative measures to operationalize its provisions. In this context, MOFCOM’s Measures establish an intergovernmental joint mechanism to investigate foreign actions perceived to affect China’s industrial and supply chain security. The Measures should not be viewed as a final step, but rather as part of an ongoing effort to construct and refine China’s broader supply‑chain security architecture.

Summary of the Measures

Under the Measures, MOFCOM is responsible for conducting industrial and supply chain security investigations, which may be initiated either ex officio or upon submission of evidence and reports by stakeholders. Investigations target two categories of conduct:

• Discriminatory, prohibitive or restrictive measures imposed on China’s industrial and supply chains by foreign governments or international organizations in violation of international law.
• Actions by foreign organizations or individuals that disrupt normal transactions with Chinese entities or adopt discriminatory practices, causing substantial harm or threats to China’s supply chains.

In assessing harm, MOFCOM considers the impact on the security of (1) key factors of production, such as critical materials, technology, capital, data and personnel; and (2) the flows of logistics, finance and information. MOFCOM evaluates the broader implications of these impacts on the competitiveness and development potential of China’s industrial chains. Notably, the Measures elevate the importance of data and information flows, signaling that future supply chain security investigations will extend beyond physical goods to encompass risks of digital decoupling.

MOFCOM may employ a range of investigative methods, including inquiries, document review, questionnaires, sampling, technical appraisals, hearings, on‑site inspections (including outside of China) and expert consultations, while also proactively collecting information. The investigation process includes case announcements, implementation, external consultations, determinations and public disclosure. MOFCOM may also, at its discretion, suspend or terminate the investigation. Investigated parties have the right to present statements and defenses, but failure to cooperate or obstruction may result in determinations being made based on available evidence.

Based on the outcome of the investigation, the Measures establish a three-layer sanctions regime.

• For foreign governments or international organizations, MOFCOM may impose restrictions on imports and exports of goods, technology and services; levy special fees on related activities; or place organizations and individuals that directly or indirectly participate in formulating, deciding or implementing restrictive measures against China’s industrial and supply chains on the countermeasure list.
• For foreign organizations and individuals, MOFCOM may impose restrictions on imports and exports, domestic investment, transactions or the ability of foreign personnel to work or reside in China.
• For organizations and individuals incorporated in China, failure to comply with MOFCOM’s countermeasures may result in exclusion from government procurement and bidding, restrictions on international trade privileges and prohibitions on cross‑border transfers of data or personal information.

Implications and Potential Risks for Multinational Enterprises

The elevation of industrial and supply chain security to a matter of national security may heighten compliance risks for multinational companies and service providers with China supply chain exposure.

For multinational companies with supply chains in China, complying with China’s Regulation could create conflicts with their obligations under U.S. or EU law. For example, if a company complies with U.S. trade directives—such as the Uyghur Forced Labor Prevention Act (UFLPA) or restrictions under the Entity List—by cutting off sourcing from Chinese suppliers or stopping sales to Chinese customers, it risks triggering Article 3 of the Measures, which defines such conduct as “violating normal market transaction principles by interrupting trade.” Chinese counterparties may petition MOFCOM to initiate an investigation under the Measures, or MOFCOM may do so ex officio, potentially resulting in the company being placed on a restricted party list. Conversely, if the company refuses to comply with U.S. directives, it faces the prospect of heavy fines or even criminal liability under U.S. law.

This dilemma places multinational companies squarely in the crossfire of conflicting regulatory regimes. To mitigate this risk, companies should establish a mechanism to identify and coordinate responses to supply chain legal conflicts early. When multinational companies face compliance decisions, they cannot simply follow the rules in a non-China jurisdiction without also considering the implications under Chinese law.

In practice, this also means that companies should be prepared to invoke the procedural safeguards available under the Measures. For instance, Article 11 grants investigated parties the right to submit statements and defenses to MOFCOM during an investigation, while Article 13 authorizes MOFCOM to conduct external consultations regarding the measures or conduct under review. By actively engaging with MOFCOM through these channels, multinational companies can explain their circumstances, request government‑to‑government consultations, and, in some cases, seek case‑specific exemptions.

Taken together, these provisions create a structured pathway for companies to manage conflicts between foreign compliance obligations and Chinese regulatory requirements. Rather than passively accepting the risk of dual exposure, companies can use these mechanisms to demonstrate good‑faith compliance efforts, highlight the practical challenges they face and potentially secure regulatory relief in advance. This proactive engagement not only helps mitigate immediate legal risks but also positions companies more strategically within China’s evolving supply chain security framework.

If you would like to discuss how these measures may affect your business, please contact one of the following authors: