At the end of the second quarter of 2026, the Regulations on the Protection of Trade Secrets (hereinafter referred to as the “Regulations”) came into effect, replacing the previously applicable 1995 rules. The Regulations apply to all business entities within China.
Key changes:
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The list of protected information has been expanded. The Regulation classifies algorithms, computer programs, and source code as protected technical information. Protected trade secrets now include, among other things, sales and financial data, as well as customer information. Protection may also be granted to interim results, data from failed experiments, and unfinished technical solutions, provided they possess potential commercial value.
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Requirements for information protection measures have been tightened. The right holder’s adoption of reasonable measures to ensure confidentiality is one of the conditions established by law for recognizing information as a trade secret. For information generated through remote work and cross-border interactions, such measures now include multi-level access control, data anonymization, and the maintenance of operation logs. Contractual protection measures are no longer sufficient. If technical safeguards are not implemented, the information may lose its status as a trade secret.
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Extraterritorial application of trade secret laws has been introduced. The regulation grants Chinese regulatory authorities the right to apply the PRC Anti-Unfair Competition Law and other PRC laws to violations of trade secret rights committed outside the territory of China. This approach applies if the act in question disrupts domestic market competition and harms the lawful rights and interests of Chinese business entities. Accordingly, the activities of foreign companies outside the PRC may result in investigations and the imposition of fines by Chinese authorities.
Thus, the new requirements affect both Chinese and foreign companies operating in the Chinese market. We recommend reviewing internal procedures for protecting confidential information and the process for exchanging data with Chinese subsidiaries and business partners.
