Designed for geopolitics, relevant to sustainability: China’s Decrees 834 and 835

China’s State Council Decree 834 (Regulations on Industrial and Supply Chain Security, effective 31 March 2026) and Decree 835 (Regulations on Countering Unjustifiable Extraterritorial Jurisdiction Measures, effective 7 April 2026) entered into force immediately upon publication, with no grace period [1][6][11][12].

They form part of a broader legal framework that China has been building since 2020 to fight against foreign sanctions and  extraterritorial measures – alongside the Unreliable Entity List, the Anti-Foreign Sanctions Law, and China’s Blocking Rules – and represent its most significant escalation of that framework to date [2][5][9].

The immediate trigger is a direct legislative response to the EU’s and US’ attempts to move business away from China, whether through legislation or sanctions [3][10]. Their intent may be geopolitical, but their reach may extend to sustainability compliance activities [8]. Both decrees are in force and, notably, already being enforced [1].

In May 2026, China’s Ministry of Justice issued its first formal determination under Decree 835, finding that the European Commission’s investigation into Nuctech under the EU Foreign Subsidies Regulation constituted improper extraterritorial jurisdiction – a signal that the framework is to a certain extent operational [1][2].

That said, no implementing guidance has been issued to date, and the language of both decrees is, by most available translations, notably broad [5][9]. Key terms such as “interrupting normal transactions” and “discriminatory measures” remain undefined, leaving significant interpretive uncertainty [4][6].

The two decrees operate differently, and it is worth distinguishing them for sustainability purposes

Decree 834 is the more directly relevant instrument: Article 13 restricts supply chain information-gathering within China by foreign entities, while Article 15 allows Chinese authorities to investigate and impose countermeasures on any foreign company or individual whose actions are deemed to cause substantial harm to the stability of Chinese supply chains [4][6][11].

Decree 835 goes further, targeting those who implement or promote foreign legal frameworks considered to constitute unjustifiable extraterritorial jurisdiction over Chinese parties [1][5][12]. For sustainability compliance, the concern is practical.

Activities as routine as collecting supplier data for Scope 3 reporting, conducting audits under CSRD, CSDDD, CBAM, or EUDR, or deciding to switch or discontinue a Chinese supplier could, under a broad reading of these regulations, be framed as falling within scope [3][8]. Whether that reading will be applied in practice remains to be seen, but the absence of definitional clarity means the risk cannot be dismissed without assessment [6][9].

The sanctions available under both decrees are significant.

For companies, they include import and export prohibitions, restrictions on investment and transactions in China, exclusion from public procurement, and revocation of licences and operating permits [4][5][10]. For individuals – including China-based managers and representatives of foreign companies – the decrees provide for bars on entry into China, revocation of work and residence permits, and, under Decree 835, potential criminal liability [1][5].

How we can support

At Nexio Projects, we are monitoring developments closely and will share updates as implementing guidance and enforcement practice emerge. In the meantime, if you are working through what this means for your value chain due diligence, we are available to work through the implications together.

References: 

[1] Morgan Lewis (2026) China Issues New Regulations on Countering Foreign Extraterritorial Jurisdiction. LawFlash, 15 April.

[2] Steptoe & Johnson (2026) Two Regulations, One Direction: China’s Expanding Economic Security Playbook. 30 April.

[3] Mayer Brown (2026) China Expands Its Playbook. 5 May.

[4] Squire Patton Boggs (2026) China’s New Supply Chain Security Regime. April.

[5] Debevoise & Plimpton (2026) China’s New Blocking and Supply Chain Regulations. 30 April.

[6] Baker McKenzie/FenXun (2026) China Introduces New State Council Decrees. April.

[7] Rödl & Partner (2026) Supply Chain Regulations in China. 21 April.

[8] Green Finance & Development Center (Fudan University) (2026) China issues strict supply chain security regulations — impacts on green economy. April.

[9] JD Supra (2026) Caught in the Crossfire: Two New China Decrees. April.

[10] Morrison Foerster (2026) [Client alert / update on China decrees]. April.

[11] Government of the People’s Republic of China (2026a) State Council Decree 834 (Regulations on Industrial and Supply Chain Security). Available at: http://gov.cn/gongbao/2026/issue_12686/202604/content_7066322.html (Accessed: 2 June 2026).

[12] Government of the People’s Republic of China (2026b) State Council Decree 835 (Regulations on Countering Unjustifiable Extraterritorial Jurisdiction Measures). Available at: http://gov.cn/zhengce/zhengceku/202604/content_7065399.htm (Accessed: 2 June 2026).