China is stepping up its protection of intellectual property in the digital age with new trade secret regulations that come into effect on June 1, 2026. Global Times reports on the updated “Provisions on the Protection of Trade Secrets,” issued by the State Administration for Market Regulation (SAMR), which significantly expand the scope of protected commercial secrets to explicitly include data, algorithms, computer programs, and codes. This marks a crucial development for China’s rapidly growing artificial intelligence (AI) sector and digital economy, addressing previously ambiguous areas of intellectual property protection and introducing novel measures to counter emerging digital infringements.
Expansion of Trade Secret Protection in the Digital Economy
The newly implemented provisions reflect the evolving landscape of business secrets in China, recognizing that traditional concepts of trade secrets must adapt to the digital transformation. According to SAMR, “with the deepening development of the digital economy, digital assets including data, algorithms, computer programs, and codes have become key commercial secrets for businesses.” This acknowledgment comes amid growing concerns over the unauthorized acquisition and use of such digital assets, which are increasingly vital to competitive advantage in industries ranging from AI development to e-commerce and beyond.
Previously, China’s trade secret laws focused more narrowly on tangible and traditional intellectual property forms, but the updated regulations explicitly incorporate technical and digital elements, providing clearer legal frameworks to protect these assets. This is particularly important for AI companies, where core innovations often reside in algorithms and proprietary data sets.
Addressing New Forms of Digital Infringement
The updated provisions also tackle modern threats that have arisen alongside remote work and international collaboration. The regulations list specific technical confidentiality measures tailored for remote working environments and cross-border cooperation, areas vulnerable to data leaks and trade secret theft.
Moreover, the rules clarify what constitutes “improper means” of trade secret infringement in digital settings. These include electronic intrusions, remote data scraping, and other sophisticated cyber techniques. SAMR warns that such infringements are occurring with growing frequency, posing significant risks to domestic firms’ intellectual property security.
Full-Chain Accountability and Third-Party Liability
A notable feature of the new rules is the emphasis on full-chain accountability. Beyond direct infringers, the provisions cover instigation, inducement, and assistance in trade secret violations, effectively extending liability to third parties who facilitate or encourage infringement. This measure seeks to close loopholes that have previously allowed complicity in trade secret theft to go unpunished.
By holding all actors involved in the infringement chain accountable, the regulations aim to create a more comprehensive deterrence environment, encouraging companies and individuals to exercise greater caution in handling sensitive digital assets.
Extraterritorial Reach Reflects China’s Global Ambitions
In an unprecedented move, the new trade secret rules assert extraterritorial applicability. If overseas infringing acts disrupt China’s domestic market order, Chinese regulators reserve the right to pursue legal liability against foreign actors. This signals China’s intent to protect its commercial interests beyond national borders, particularly as Chinese AI firms and digital enterprises expand globally.
Such extraterritorial provisions could complicate international trade and cooperation, as foreign companies must now consider Chinese regulations when handling data or algorithms related to the Chinese market. This approach aligns with China’s broader strategy to assert sovereignty over digital assets and intellectual property globally.
Challenges and Opportunities for AI Innovation
The expanded protection of AI algorithms and data has garnered attention from industry experts. Pan Helin, a member of the Information and Communication Economy Expert Committee under the Ministry of Industry and Information Technology, highlights the unique challenges in safeguarding AI technologies. He notes that algorithms often operate as “black boxes,” making it difficult to identify and protect the specific innovations they involve.
Pan explains, “what is more likely protected is the underlying basic code,” emphasizing the importance of focusing legal protections on the foundational elements of AI models rather than their opaque outputs.
Despite these challenges, Pan views the new regulations as a positive development for China’s AI industry. He states, “the overall move will enable Chinese large-language AI model companies to actively innovate and develop original algorithms, free from the need to rely on following others or using knowledge distillation to build their models.” This suggests that the strengthened protections could encourage more indigenous innovation by reducing fears of intellectual property theft and promoting confidence in safeguarding proprietary technology.
Implications for China’s AI Sector and Beyond
China’s AI industry has long grappled with issues of transparency and intellectual property protection. The recent launch of China’s AI black box transparency framework, covered in detail by EastFrontier, underscores the government’s dual focus on both ethical AI development and the safeguarding of proprietary technology. By enhancing trade secret protections, policymakers are addressing a critical piece of the innovation ecosystem, ensuring that companies can invest in cutting-edge research with stronger legal backing.
The inclusion of algorithms and data within trade secret protections also aligns with global trends where intellectual property laws are evolving to keep pace with AI and digital economy demands. However, China’s approach is distinctive in its assertive extraterritorial reach and comprehensive coverage of third-party liabilities.
Challenges Ahead and Enforcement Outlook
While the new provisions are comprehensive, their effectiveness will depend heavily on enforcement. Digital infringements such as remote data scraping and electronic intrusion are notoriously difficult to detect and prove. The technical measures prescribed for confidentiality in remote work and cross-border collaboration will require companies to invest in robust cybersecurity practices. At the same time, regulators will need to enhance their capabilities to investigate and prosecute complex digital trade secret violations.
Moreover, the extraterritorial application of the law may face challenges in international legal cooperation and enforcement, potentially leading to friction in cross-border business relationships. Companies operating in or with China will need to carefully navigate these rules to avoid inadvertent violations.
The implementation of the “Provisions on the Protection of Trade Secrets” effective June 1, 2026, marks a significant step in China’s efforts to protect digital intellectual property in an increasingly complex technological environment. By explicitly including AI algorithms, data, and codes under the umbrella of trade secrets, China is signaling its commitment to fostering homegrown innovation and securing competitive advantages in the global digital economy.
These regulations will likely influence how Chinese AI developers approach research and development, encouraging more original work and reinforcing the importance of cybersecurity in protecting commercial secrets. For international businesses and observers, the new rules also serve as a reminder of China’s growing assertiveness in digital governance and intellectual property protection.
For ongoing coverage of China’s AI policy landscape and the latest developments in digital economy regulations, EastFrontier remains your premier source. Learn more about China’s initiatives for AI transparency and governance in our detailed report on the China AI black box transparency framework.