China enforces new security rules to defend supply chains from global threats

China has implemented a new regulation on supply chain security that hands officials the power to punish any entities deemed to threaten the country’s access to vital resources and the free flow of goods, as Beijing confronts an increasingly turbulent global outlook.The 18-point regulation – which was passed and became effective on March 31, but the full text of which was only published on Tuesday – elevates safeguarding China’s industrial and supply chains to a national security issue.The new rules lay out the responsibilities of national and local authorities to ensure “stable, continuous” production and flows of raw materials, technologies, equipment and products in key sectors through information sharing, risk monitoring and emergency management.They also call for officials to create a list of sectors that are vital to China’s economic and national security, as well as strengthen strategic reserves of goods and capacity. They also stress the need for better systems to be put in place to allow the emergency deployment of reserves during a crisis.Notably, articles 14 and 15 stipulate that the State Council, China’s cabinet, and its related departments can launch investigations into external actions – such as discriminatory bans or restrictions, including suspending normal business transactions – that endanger the country’s industrial and supply chains.Chinese officials can then take countermeasures against any foreign or Regional entities or International organisations found to have taken such actions, including imposing special charges, entry bans or export restrictions, according to the regulation.