China passes revised foreign trade law to bolster trade war capabilities

BEIJING: China on Saturday passed revisions to a key piece of legislation aimed at strengthening Beijing’s ability to wage trade war, curb outbound shipments from strategic minerals to toys, and further open its USD 19 trillion economy.

The latest revision to the Foreign Trade Law, approved by China’s top legislative body, will take effect on March 1, 2026, state news agency Xinhua reported on Saturday.

The world’s second-largest economy is overhauling its trade-related legal frameworks partly to convince members of a major trans-Pacific trade bloc created to counter China’s growing influence that the manufacturing powerhouse deserves a seat at the table, as Beijing seeks to reduce its reliance on the US.

Adopted in 1994 and revised three times since China joined the World Trade Organization in 2001, most recently in 2022, the Foreign Trade Law empowers policymakers to hit back against trading partners that seek to curb its exports and to adopt mechanisms such as “negative lists” to open restricted sectors to foreign firms.

The revision also adds a provision that foreign trade should “serve national economic and social development” and help build China into a “strong trading nation”, Xinhua said.

It further “expands and improves” the legal toolkit for countering external challenges, according to the report. The revision focuses on areas such as digital and green trade, along with intellectual property provisions, key improvements China needs to make to meet the standards of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, rather than the trade defence tools the 2020 revamp honed in on following four years of tariff war with the first Trump administration. Beijing is also sharpening the wording of its powers in anticipation of potential lawsuits from private firms, which are becoming increasingly prominent in China, according to trade diplomats.

“Ministries have become more concerned about private sector criticism,” said one Western trade diplomat with decades’ of experience working with China. “China is a rule-of-law country, so the government can stop a company’s shipment, but it needs a reason.” “It’s not totally lawless here. Better to have everything written out in black and white,” they added, requesting anonymity, as they were not authorised to speak with media.