China’s legal framework for trade secret protection has entered a phase of accelerated refinement, driven by the strategic imperative to secure technological leadership in critical industries such as semiconductors, biopharmaceuticals, and advanced manufacturing. With trade secret disputes rising by 34% annually since 2022 and average damages awarded tripling to RMB 3.76 million (US$520,000) in 2024, judicial and administrative reforms reflect a systemic shift toward aligning domestic protections with global innovation governance standards.
The 2023 amendments to China’s Anti-Unfair Competition Law (AUCL), effective January 2024, introduced groundbreaking provisions under Article 32, shifting the burden of proof to defendants in cases involving suspected trade secret misappropriation. This reversal, mirroring U.S. Defend Trade Secrets Act principles, compels accused parties to demonstrate lawful acquisition of disputed information—a significant departure from prior plaintiff-centric evidentiary requirements. Simultaneously, statutory damages ceilings were raised to RMB 5 million (US$690,000) for malicious infringement, while punitive damages of up to five times actual losses now apply to repeat offenders under Article 17.
Operational enforcement has been bolstered through cross-agency coordination mechanisms. The Supreme People’s Court’s 2024 judicial interpretation mandates provincial courts to establish specialized panels for trade secret cases involving foreign parties or cross-border data flows, resolving jurisdictional conflicts that previously delayed 38% of such litigation. Parallel administrative actions include the State Administration for Market Regulation’s (SAMR) 2024-2026 campaign targeting industrial espionage in supply chains, which sanctioned 1,240 enterprises for illicit technology transfers in its first year alone.
Sector-specific dynamics underscore the regime’s evolving priorities. Semiconductor-related trade secret cases accounted for 22% of 2024 filings, with landmark rulings such as the Shanghai High Court’s RMB 87 million (US$12 million) award against a state-owned foundry for reverse-engineering EUV lithography components. Biotechnology disputes surged by 41%, driven by mRNA vaccine formula theft allegations, while new-energy vehicle battery patent-trade secret hybrid claims increased by 29%, reflecting the blurred boundaries between formal IP rights in fast-innovating fields.
International compliance pressures continue shaping policy trajectories. China’s implementation of Phase One trade agreement commitments with the U.S. has reduced forced technology transfer complaints by foreign firms by 17% since 2023, per Ministry of Commerce data. However, the EU Chamber of Commerce’s 2024 Business Confidence Survey indicates 63% of European tech companies still perceive inadequate trade secret safeguards when collaborating with Chinese partners—a disconnect authorities aim to address through the newly ratified Hague Evidence Convention, streamlining cross-border evidentiary procedures in 2025.
Domestic enterprises are adapting through enhanced cybersecurity protocols. The Cyberspace Administration’s 2024 audit of 500 listed tech firms revealed a 72% increase in blockchain-based trade secret custody systems, while state-backed industrial clusters like Chengdu’s AI Park now require ISO 37001 compliance for anti-bribery and data governance as preconditions for subsidies.
As China positions itself as a global innovation rule-maker, the AUCL reforms’ fusion of evidentiary pragmatism and deterrence-driven penalties signals maturation beyond reactive legislation. With the Supreme People’s Procuratorate prioritizing criminal prosecution of trade secret theft involving national security implications and SAMR drafting sector-specific confidentiality guidelines for quantum computing, the regime confronts the dual challenge of fostering collaborative R&D ecosystems while asserting technological self-reliance—a balancing act that will define China’s IP governance in the age of geotechnological fragmentation.