China’s intellectual property enforcement has long been a focal point for global brands. As one of the world’s largest manufacturing and export hubs, the country’s treatment of IP issues affects international trade far beyond its borders. A recent development, the draft Foreign Trade Law, suggests a significant policy shift that could redefine how intellectual property is protected and enforced in China.

This draft law marks an important step toward integrating IP enforcement into the broader framework of trade regulation. If implemented, it could transform intellectual property from a private legal issue into a national trade compliance matter.

What’s in the Draft Law?

The proposed legislation weaves IP considerations directly into export and import controls. Companies engaged in cross-border trade will be required to ensure that the goods they manufacture, license, or export comply with Chinese IP laws. The draft calls for enhanced disclosures, licensing verification, and stronger penalties for infringement tied to trade activity.

In essence, IP enforcement becomes part of trade compliance. Instead of relying solely on civil or administrative disputes between companies, the government would have the power to intervene where IP violations intersect with export or import operations. This approach signals that IP protection is no longer just a courtroom issue but an integral component of China’s economic governance.

Why This Is Significant

Historically, intellectual property disputes in China have been handled through the courts or administrative agencies, often with inconsistent results. By embedding IP obligations within trade law, the Chinese government is shifting enforcement to a higher, systemic level.

This change could have profound implications. It introduces a form of government-backed enforcement that reduces the burden on individual rights holders to pursue every violation. It also aligns China’s domestic framework with global expectations for stronger IP protections. For international stakeholders, it suggests that counterfeiters and infringing exporters may soon face trade penalties in addition to traditional IP consequences.

Impact on Chinese Companies

For Chinese exporters and manufacturers, this draft law raises the bar for internal compliance. Companies will likely need to implement more formalized IP management systems to avoid sanctions. This may include conducting regular IP audits, confirming that licensed technologies are properly documented, and ensuring all export applications include accurate ownership disclosures.

The potential downside is that compliance costs could increase, particularly for smaller enterprises. However, the law may also encourage stronger innovation and greater accountability within domestic industries. Companies that establish clear IP documentation and licensing structures will be better positioned to compete internationally.

Impact on Foreign Brands

For foreign rights holders, the integration of IP enforcement into trade law may create new opportunities. It could make it easier to prevent infringing goods from leaving China or entering other markets, especially if customs and trade authorities take a more active role in identifying and penalizing violators. Foreign brands might also gain new leverage in disputes, as trade compliance violations can carry consequences that extend beyond simple damages.

This shift could also open the door for foreign companies to influence Chinese policy through trade negotiations and partnerships. With IP now tied to export eligibility, global brands will have a stronger basis to request transparency and accountability from their Chinese counterparts.

Open Questions and Potential Challenges

While the draft law represents progress, important questions remain. How rigorously will enforcement be applied, and will it reach smaller or politically connected manufacturers? Will local protectionism continue to interfere with implementation in certain regions? The practicalities of monitoring and verifying IP compliance across thousands of exporters may also prove difficult.

There is also the risk of over-enforcement, where legitimate exporters are penalized due to bureaucratic missteps or overly cautious interpretations of IP law. Striking the right balance between enforcement and trade facilitation will be crucial to the law’s success.

Action Items for Rights Holders

For companies operating in or sourcing from China, preparation is essential. Steps to consider include:

• Monitoring legislative progress closely and reviewing government comment periods.
• Conducting internal audits of existing Chinese partnerships and licensing agreements.
• Ensuring that all IP registrations are current and properly documented.
• Preparing for potential disclosure or registration requirements tied to export activity.
• Engaging experienced Chinese counsel early to assess compliance risks and opportunities.

These proactive measures will allow brands to adapt smoothly if the draft becomes law and to take advantage of the new enforcement tools it introduces.

China’s draft Foreign Trade Law represents more than a procedural update, it signals a strategic evolution in how the country views intellectual property. By embedding IP enforcement within trade regulation, China is positioning itself as both a stricter regulator and a more credible global partner in IP protection.

For multinational companies, this development deserves close attention. The law could streamline enforcement, deter counterfeiting at scale, and reshape how global supply chains interact with Chinese trade compliance systems. In an interconnected economy, understanding and preparing for these shifts is not just prudent; it is essential to protecting innovation worldwide.