The Securitization of Commerce: Analyzing China’s Revised Foreign Trade Law of 2026

On March 1, the Foreign Trade Law of the People’s Republic of China, which was revised and approved in December 2025, entered into force. It marks a clear departure from the principles of liberalization in favor of a governance model strongly centered on national security. Although the stated objective is to strengthen intellectual property rights and adapt legal instruments to geopolitical tensions, the legislation institutionalizes a clear securitization of foreign trade.

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Article 1 of the law explicitly establishes the protection of national sovereignty, security, and development interests as a fundamental objective of commercial activity. This approach grants government officials broad discretion in defining and countering perceived threats, as confirmed by Articles 18 and 29, which allow for the prohibition or restriction of the import and export of international goods, technologies, and services on grounds of security and the protection of public interests. Article 40 further reinforces this framework by authorizing the adoption of restrictive measures against foreign individuals or organizations accused of undermining the nation’s sovereignty and development interests.

The Chinese Communist Party has effectively transformed commercial law into a tool for strategic control and foreign policy. The new chapter on intellectual property protection introduces defensive and retaliatory mechanisms. Article 35 stipulates that the government may take measures against countries or regions that do not grant Chinese entities national treatment or adequate protection of intellectual property rights. Furthermore, Article 34 allows authorities to intervene directly in licensing agreements if certain clauses are deemed to hinder fair competition. The regulatory framework strictly aligns with Beijing’s industrial priorities by strengthening state support for sectors poised for global expansion. Article 61 explicitly promotes the acceleration of a green trade system by encouraging the import and export of low-carbon products. At the same time, Articles 59 and 60 support innovation in cross-border e-commerce and the development of digital trade, while Article 63 encourages professional service networks in the legal, financial, and accounting sectors to expand to help domestic operators explore international markets.

For foreign companies, operational and legal risks increase considerably within this highly asymmetrical framework. Foreign capital is constantly drawn in to fuel the domestic technology sector but is subject to strict controls and a rigorous compliance regime. The obligation to comply with complex standards compounds the inherent nature of the local economic system, where the distinction between private commercial interests and state priorities is effectively nullified. Foreign companies find themselves forced to operate in an opaque environment where political compliance and national security directives systematically override the normal dynamics of the global free market.

In China, no company is truly private: the mandatory presence of Chinese Communist Party committees within companies means that every business decision is subject to state security objectives. Given an increasingly repressive regulatory environment, China is now considered a “hostile” jurisdiction.