In June 2026, the Ministry of Commerce (MOFCOM) announced Measures for Industrial and Supply Chain Security Investigations .They formally establish MOFCOM’s investigative role for supply chain security and clarify the procedures and methods for conducting their investigations, for the first time also including cross-border investigations. Facing this, supply chains could face greater scrutiny in the future.
Big Picture
China is accelerating the building up of a comprehensive supply chain security regime. Over the past several months, a series of regulations have been introduced that strengthen state oversight of strategic supply chains and expand the legal tools available to respond to foreign restrictions affecting supply chain security.
The central-level policy direction was explicitly established in April with the Regulations on the Security of Industrial and Supply Chains released by the State Council. This is China's first dedicated regulation focusing exclusively on supply chain security. The regulations do not just treat supply chain resilience as part of broader industrial policy, but it has now been elevated into a standalone regulatory priority (see our Advocacy Alert for more details). The Measures for Industrial and Supply Chain Security Investigations translate the regulations into an operational enforcement mechanism by establishing procedures for supply chain security investigations.
China's latest Five-Year Plan also calls for improving the self-reliance of supply chains, for establishing comprehensive supply chain security risk assessments and response mechanisms, as well as for strengthening the efficient utilization of strategic minerals (See our Deep Dive: China's Foreign Trade for Next Five Years).
The June Measures can be seen as part of a broader trend of responding to geopolitical tensions from different angles: Beyond supply chain risk management, China has also expanded its foreign trade toolbox across several related areas this year, including:
- The regulations to counter foreign extraterritorial jurisdiction (April), strengthening China's legal response to foreign sanctions and export controls;
- The outbound investment regulations (May) are increasingly being brought Chinese companies “going global” under a stronger supervisory framework.
- New strategic minerals and dual-use export control measures (June), introducing stricter reporting requirements and limiting foreign government inspections of Chinese exporters.
Taken together, these developments show that China is building a broader security architecture that integrates supply chain governance, export controls, anti-sanctions instruments, and strategic resource management into a more coordinated regulatory system.
Potential Application of the Measures
MOFCOM’s investigation could be triggered by the following:
- Foreign countries or regions that impose restrictions considered discriminatory to China’s supply chains or that implement or support actions abroad considered harmful to China’s supply chain security
- Foreign companies or individuals that disrupt or abandon commercial transactions with Chinese partners without any reason, or adopt discriminatory measures that cause substantial harm or pose threats to China’s supply chain security
This suggests that foreign companies complying with restrictions or sanctions imposed by their home country’s government could potentially fall within the scope of the second category. Actions potentially considered discriminatory could include stopping transactions with a supplier or customer.
MOFCOM may investigate risks affecting China's supply chains, including:
- Security of key technologies, materials, capital, assets, data and information
- Disruptions to logistics, trade and cross-border supply chains
- Impacts on the competitiveness and stability of China's value chains
This gives regulators considerable discretion on what may constitute a supply chain security risk.
Expanded Investigative Powers
The new Measures formally designate MOFCOM as the lead authority for supply chain security investigations and establish the procedures for initiating and conducting investigations. They also create a formal reporting mechanism under MOFCOM for companies and industry organizations to report the conducts which harm supply chains either to MOFCOM or its local commerce authorities.
Besides, the MOFCOM is authorized to conduct investigations through a variety of methods, including:
- collect evidence through questionnaires, hearings, document reviews, field inspections and technical assessments
- establish expert advisory panels for providing legal and technical support
Crucially, MOFCOM might now also conduct investigations abroad, “unless prohibited by the relevant jurisdiction”. Although investigations abroad may rarely be permitted in practice, this provision signals China's intention to extend the reach of its enforcement framework beyond its borders.
As a result, penalties are not limited to prohibiting or restricting the import or export of relevant goods, technologies, or international services trade, and may also include the imposition of special fees.
What it means for German Companies
China's supply chain regulatory framework is becoming increasingly comprehensive and operational, with the potential to have more tangible implications for German companies in China. While the immediate compliance obligations for German companies remain uncertain, the overall regulatory direction is clear: supply chain management is increasingly being viewed through the lens of national security and geopolitical tensions.
The new Measures significantly increase regulatory uncertainty for companies operating in or sourcing from China. Unlike previous mechanisms, such as list-based methods for export control, which primarily targeted specific company cases, the Measures establish much broader categories of conduct that could potentially be deemed harmful to China's supply chains.
Since the criteria for initiating investigations remain deliberately broad, it might be difficult for German companies to predict enforcement risks or evaluate their potential exposure accurately.
Below are some possible steps for German and other foreign companies to consider:
- Closely monitor how the first investigations are launched and enforced, as early cases will most likely define future enforcement practices.
- Review internal compliance procedures where business decisions may intersect with foreign sanctions or export controls and establish internal processes to evaluate the potential impacts of such decisions.
- Carefully assess supply chain adaptation plans such as terminating the contracts with Chinese suppliers and their potential influences.
- Pay particular attention to the strategic sectors in the value chain such as semiconductors, critical minerals, advanced manufacturing and dual-use technologies, where regulatory scrutiny is most likely.
Overall, the new measures should be viewed not as a specific regulation only targeting supply chains, but as another building block in China's evolving trade protection framework.