1. Cited Data

Article 4 of the Guidelines stipulates: “Where data cited in an advertisement is obtained through experiments, measurements, inspections, testing or other means, the institution issuing the relevant experimental conclusions, measurement findings or inspection and testing data (including results, conclusions and the like, hereinafter the same) shall possess corresponding statutory qualifications and professional competence. Measuring instruments, facilities, environmental conditions and other related elements shall comply with national requirements set forth in laws, administrative regulations, rules, mandatory national standards, metrological technical specifications and other relevant national provisions. If national or industrial standards govern experimental, measurement, inspection and testing methodologies, such prescribed standards shall be followed. In the absence of applicable national or industrial standards, methodologies widely recognized within the relevant industry or field shall be adopted.”

This provision sets a stringent standard requiring issuing institutions to satisfy both statutory qualifications and professional competence (the two requirements are conjunctive rather than alternative). This raises a critical question: will measurement data generated by an enterprise’s internal laboratory be deemed false citations in the future, solely due to the laboratory lacking statutory qualifications?

2. Cited Excerpts and Quotations

Article 7 of the Guidelines provides: “Excerpts and quotations cited in advertisements shall be consistent with the original text in meaning; the source literature and materials shall be genuine, existing and retrievable; and the viewpoints contained therein shall conform to general scientific knowledge.”

This clause emphasizes that all cited source literature must be authentic and accessible. Beyond regulating enterprises’ citations of traditional printed literature, the provision imposes heavier due diligence obligations on enterprises to verify the authenticity of reference materials amid the current AI era.

3. Legibility Requirements for Cited Content

To curb the prevalent deceptive advertising practice of “large eye-catching headlines paired with tiny disclaimer fine print”, Article 11 of the Guidelines states: “Where an advertisement with cited content includes information regarding product performance, functions, applications, specifications, validity periods, preferential terms and other similar particulars, advertisers shall not adopt measures that hinder consumer identification — such as reducing font size, altering font styles, or using text colors similar to the background — to narrow the scope of the aforementioned product particulars, or to provide interpretations and explanations that contradict general scientific knowledge or harm consumers’ interests.”

4. Exempt Scenarios for Absolute Superlative Terms in Cited Advertisements

Article 13 of the Guidelines specifies three exempt scenarios where the use of absolute superlative terms will not trigger law enforcement penalties:

1. The geographic scope referenced by the superlative term covers an area smaller than a provincial-level administrative region.
2. The industry or field of the goods referenced by the superlative term falls under a narrower classification than the industrial categories defined in national and industrial standards such as the Industrial Classification for National Economic Activities.
3. No dedicated national or industrial product/service standards apply to the goods referenced by the superlative term.

To maintain unified product market positioning and stable sales channels, many manufacturers adopt control measures in distributor management, such as setting minimum retail prices and imposing penalties for parallel gray-market shipments. However, such practices carry significant risks of being deemed vertical monopolistic conduct. Since China’s first administrative penalty case involving vertical monopoly agreements in 2013 — in which the National Development and Reform Commission imposed fines of over RMB 200 million each on Moutai and Wuliangye for mandating minimum resale prices on distributors — administrative and civil litigation cases concerning vertical monopolistic conduct have remained frequent.

The Anti-Monopoly Law, revised in 2022, introduced a safe harbor regime. The Provisions on Prohibiting Monopoly Agreements (revised in 2025), which took effect on February 1, 2026, further clarified quantitative thresholds for determining eligibility for the “safe harbor”.

Article 17 of the revised 2025 Provisions on Prohibiting Monopoly Agreements stipulates that two typical categories of vertical monopolistic conduct are presumed to have no anti-competitive or competition-restricting effects and thus shall not be prohibited, provided specific criteria are satisfied throughout the term of the relevant agreement:

1. Vertical price-restricting agreements (e.g., fixing retail prices). The quantitative safe harbor thresholds require that the market share of both the undertaking and its counterparty shall be below 5%, and the annual turnover of the covered goods shall not exceed RMB 100 million.
2. Vertical non-price-restricting agreements (e.g., restricting resale counterparties). The quantitative safe harbor thresholds require that the market share of both the undertaking and its counterparty shall be below 15%.

The release of these quantitative safe harbor thresholds has drawn clear legal red lines. It partially alleviates enterprises’ dilemma of needing to regulate distributors while hesitating to impose explicit controls due to ambiguous assessment standards, representing a moderate relaxation of oversight over vertical monopoly agreements. Meanwhile, it guides enterprises to administer vertical distribution agreements in a more objective, appropriate manner and avoid inadvertent violations.

What practical steps should be taken by enterprises? In short, enterprises could conduct an immediate self-assessment to verify whether business falls within the “safe harbor” scope.

Three core elements must be reviewed during self-assessment.

1. Define the “relevant market” in accordance with the Guidelines of the State Council Anti-Monopoly Commission on the Definition of Relevant Markets.
2. Determine the denominator used to calculate market share. This calculation is highly complex. In administrative enforcement and judicial practice, the denominator is normally derived from data published by national statistical authorities, industry associations and independent research institutions. In addition, enterprises could also engage industry and economic experts to provide market research reports and economic analysis opinions. For instance, Article 11 of the Judicial Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Monopoly Disputes permits parties to apply to courts for industry and economic experts to testify on specialized technical matters. For internal compliance self-assessment, enterprises may first reference data from the National Bureau of Statistics, reputable industry associations and professional research firms. Besides the most prevalent metrics of sales volume and turnover, denominators may also be defined based on unit sales, output, production capacity, active users of internet platforms and other indicators. It is critical to note that market denominator data may fluctuate, so enterprises are advised to establish a dynamic market data monitoring system.
3. Determine the numerator for market share calculation, which shall align with the selected denominator metric. One unresolved legal ambiguity persists when calculating distributors’ market share, whether the calculation shall only include sales of the manufacturer’s own products. For example, if Company A manufactures toothpaste under Brand A, and its distributor sells toothpaste of both Brand A and Brand B, should the distributor’s market share be calculated solely based on Brand A’s sales revenue, or aggregate sales revenue of both brands? The Provisions on Prohibiting Monopoly Agreements does not contain any explicit provision on this point. Our prevailing interpretation is that total sales revenue of all products shall be included, as enforcers generally do not define the relevant market as a single-brand market when calculating distributors’ market shares.

If the self-assessment confirms the enterprise fails to meet the quantitative safe harbor thresholds, the enterprise must promptly implement corrective measures and revise clauses in distribution agreements and internal distributor management policies.

A final critical reminder is that the quantitative safe harbor thresholds laid out in the Provisions on Prohibiting Monopoly Agreements apply to most industries. Special sectors including intellectual property and the automotive industry are governed by separate rules. For example, the Guidelines on Anti-Monopoly Enforcement in the Field of Intellectual Property Rights and the Guidelines on Anti-Monopoly Enforcement in the Automobile Industry set a 30% market share threshold, rather than the standard 5% cap.

Company A adopted AI for map data collection and resolved to abolish its Navigation Product Department, which previously handled manual data collection. So Company A negotiated with Lau on amending his employment contract, but Lau refused. Company A unilaterally terminated Lau’s contract. The arbitral tribunal and the courts of both instance all held that the dismissal was unlawful. (See (2024) Jing 01 Min Zhong No. 11896).

Company B replaced part of Yu’s job responsibilities with AI, and negotiated cutting his monthly salary from RMB 25,000 to 15,000. Yu refused this proposal. Company B unilaterally terminated Yu’s contract. Both the labor arbitration tribunal and the court held that the dismissal was unlawful. (This case was listed as one of the Model Cases on Protection of Rights and Interests of Enterprises and Practitioners in the AI Industry released by Hangzhou Courts on April 28, 2026.)

Company C negotiated employment contract amendments with hundreds of its employees. It proposed transferring Zhu from a production line management position to an operator position with unchanged pay, but Zhu refused. Company C unilaterally terminated Zhu’s contract. Zhu initiated labor arbitration, arguing that Company C had maintained steady revenue in recent years, and the staff reduction by half after launching fully automated AI production lines did not constitute a “material change of objective circumstances”. To prove the alleged material objective change, Company C submitted evidence including records of idle production lines, client emails notifying discontinuation of relevant products, and client order correspondence from 2022 to 2024. The arbitral tribunal and courts of both instances accepted Company C’s statement and held that the dismissal was lawful. (See (2025) Yue 2071 Min Chu No. 38360).

All three cases involve redundancies arising from AI, but why the judicial rulings differ drastically?

The core point is that staff surplus solely causing by AI is not equated with a “material change of objective circumstances”. To prove a “material change of objective circumstances” requires more objective factors.

In the Beijing case, the court held that Company A’s shift to AI map data collection, driven by predictable operational factors including technological advances and market shifts, merely represented an adjustment to its business strategy and scope, which shall not be deemed as a “material change of objective circumstances”. Another noteworthy detail cited in the judgment is that, although Company A claimed to abolish the Navigation Product Department, other employees of this department remained employed, and the company never offered Lau a specific alternative position after restructuring.

Likewise, the Hangzhou court ruled that AI technology constituted a market competition driven technical upgrade, which would not automatically be deemed as a “material change of objective circumstances” that renders performance of an employment contract impossible. The court further noted that Company B’s proposed salary cut was unreasonable, leading to a final finding of unlawful dismissal.

By contrast, Company C prevailed in the Guangdong case because it substantiated a chain of objective facts: idle production lines, shrinking order volumes, mass layoffs of hundreds of line workers, as well as a concrete transfer offer to Zhu with identical compensation terms.

Based on the rationales behind the three cases, the following preliminary conclusions can be drawn:

1. Where AI is the only reason for staff surplus, it shall not be deemed as a “material change of objective circumstances”.
2. If AI is the reason for staff surplus, but alongside there are some other adverse operational conditions (e.g., declining orders, operating deficits, production suspension and so on), supported by objective documentary evidence, there is a relatively higher possibility that the circumstance will be recognized as a “material change of objective circumstances”.
3. On the premise of Item 2 above, the possibility of judicial recognition rises further if the company conducts equal negotiation for contract modification with all affected employees. If salary adjustments are proposed, the reduction margin shall be kept as minimal as possible (a 20% pay cut is generally regarded as the acceptable upper limit).

From the employer’s perspective, a smarter workforce planning is more important. Companies shall plan ahead, forecast workforce demand fluctuations reasonably in line with medium and long-term corporate development strategies, and conduct overall allocation and redistribution of staff numbers and positions in a timely manner. Meanwhile, companies shall refine employee performance appraisal systems and establish workplace rules that reward dedicated high-performing staff while enabling lawful management of underperforming employees.

1. Two Categories of Applicable Scope

(1) Workers who have reached the statutory retirement age.

(2) Workers who have taken early retirement in compliance with relevant regulations.

2. Major Rights and Interests of Elderly Workers

3. Rules for Workers under Flexible Deferred Retirement

Article 23 stipulates that the Labor Contract Law shall still apply to elderly workers who adopt flexible deferred retirement.

The revised Company Law (2023) came into force on July 1, 2024. It imposes restrictions on the capital contribution period, triggering a wave of corporate capital reductions. Meanwhile, due to the backdrop of the economic environment in recent years, numerous enterprises have opted for capital reduction for various reasons. Although the Company Law prescribes relevant procedural requirements for capital reduction, specific rules vary across practical scenarios. We have compiled key matters concerning capital reduction for limited liability companies for reference.

Firstly, the procedures for capital reduction differ depending on the reasons for such action.

Secondly, documentation requirements for capital reduction vary according to the reduction ratio.

Where a company has multiple shareholders, capital reduction falls into two categories: pro rata capital reduction and targeted capital reduction. Targeted capital reduction means the reduction applies only to specific shareholders, or the reduction ratio for certain shareholders differs from that of others. Article 66 of the Company Law stipulates that unless otherwise provided for in the articles of association, a capital reduction resolution shall be adopted by shareholders holding more than two-thirds of the voting rights. If this rule were applied to targeted capital reduction, majority shareholders could easily override minority shareholders. To address this issue, Article 224 of the Company Law makes special provisions, that is, targeted capital reduction is permissible only if otherwise stipulated by law or separately agreed upon by all shareholders. In other words, targeted capital reduction shall obtain unanimous consent of all shareholders.

Thirdly, procedural rules for capital reduction differ due to varying industrial regulatory requirements. For instance, capital reduction in the financial sector (including banking, insurance, securities, futures, etc.) is subject to prior approval. Relevant approval documents must be obtained before proceeding with subsequent procedures. State-owned enterprises are also governed by special rules. For example, an asset appraisal is mandatory prior to targeted capital reduction for state-owned enterprises.

Lastly, directors, supervisors and senior management personnel shall fully perform their fiduciary duties. The Company Law (2023) strengthens the liabilities of directors, supervisors and senior management for maintaining the company’s registered capital. Article 266 of the Company Law prescribes that where an unlawful capital reduction causes losses to the company, the liable directors, supervisors and senior management personnel shall be held liable for compensation.

In judicial practice, there are four major categories of circumstances widely recognized as grounds for determining that the contract cannot be further performed:

• Disqualification of the parties, such as, the employer goes bankrupt, the employee reaches the statutory retirement age, or the contract expires with no legal obligation for renewal.
• The employee has a new job, which indicates the employee has no actual intention to continue performing the contract. This ground is subject to certain disputes in practice, yet the mainstream judicial stance confirms that the contract cannot be further performed.
• The position has been abolished or replaced. This is a highly contentious ground, as courts hold varying views on whether the employer’s abolition or replacement of the position is reasonable. Additionally, if the employer offers a new position under such circumstance and the employee refuses, most courts will rule that the contract cannot be further performed.
• Complete breakdown of mutual trust between the parties. This is the most controversial ground in judicial practice. Even in Beijing, where courts tend to uphold requests for reinstatement of the contract, judicial opinions and considerations vary from case to case. For example, in case No. (2023) Jing 01 Min Zhong No. 11628, the court held that both parties are entitled to pursue remedies via arbitration or litigation in accordance with the law, and such proceedings do not objectively render the contract unenforceable. By contrast, in case No. (2025) Jing 03 Min Zhong No. 16197, the court held that prolonged litigation and confrontation between the parties had destroyed mutual trust, so there was no foundation for continued performance of the contract.

Article 76 of the Answers to Issues Concerning the Trial of Labor Dispute Cases (I) issued by the Higher People’s Court of Beijing and the Beijing Labor and Personnel Dispute Arbitration Commission, summarizes six specific circumstances, alongside the general rule that “the parties have lost the foundation of mutual trust”. These six circumstances cover the four categories mentioned above.

Article 16 of the Judicial Interpretation (II) of the Supreme People’s Court on the Application of Law in the Trial of Labor Dispute Cases, which took effect on September 1, 2025, prescribes six circumstances under which an employment contract cannot be further performed.

From the employer’s perspective, unilateral dismissal carries the risk of being deemed an illegal termination, which may even lead to an order to reinstate the employment relationship. Hence, employers must exercise caution throughout the entire process.

First, employers could take the following measures to minimize the risk of a ruling of unlawful termination: (1) Ensure the company’s rules and regulations have undergone due democratic procedures and that their provisions are reasonable. (2) Enforce the rules and regulations strictly on a daily basis. Many employers lose litigation cases because they adopt a lax management style in daily operations but impose harsh penalties when dismissing employees. (3) Follow all due procedural requirements for dismissal.

Second, if an employer planned to fire an employee, it shall identify and organize valid grounds and supporting evidence proving the employment contract cannot be performed in advance.

1. Determination of Intent in IPR Infringement

Article 3 of [2021] No. 4 stipulates five specific circumstances plus a catch-all clause for determining intent. Article 6 of [2026] No. 7 adds two new circumstances: (1) Recommitting the same or similar infringing acts after reaching a settlement with the plaintiff and agreeing to cease the infringement; and (2) Concealing the actual control relationship by establishing affiliated companies, changing legal representatives or controlling shareholders, setting up companies under an anonymous identity, or signing exemption agreements to evade legal liabilities for infringing the intellectual property right involved in the case.

In addition, [2026] No. 7 makes minor adjustments to certain circumstances: (1) Where the plaintiff or an interested party notifies the defendant to stop the infringement, such notice is limited to an effective notice. The purpose is to prevent the plaintiff or interested parties from using “ineffective notices” to impose adverse consequences on the defendant. For example, a notice sent to the defendant’s registered address but not signed for by the defendant, where the defendant may not even be aware of the infringement; (2) Where the defendant or its legal representative/manager is identical to the legal representative, manager or actual controller of the plaintiff or interested party, a subjective element is added that such relevant persons knew or ought to have known about the infringed intellectual property right; and (3) In addition to piracy and counterfeiting registered trademarks, counterfeiting others’ patents is newly added.

2. Determination of “Aggravating Circumstances”

Article 4 of [2021] No. 4 sets six specific circumstances plus a catch-all clause for determining aggravating circumstances. Article 7 of [2026] No. 7 largely retains the original provisions and refines certain specific circumstances: (1) A party engaging in IPR infringement as a profession is defined as taking infringing acts as the main business or deriving main profits from infringement gains; (2) Refusing to comply with preservation rulings shall be deemed an aggravating circumstance only without just cause; (3) Substantial losses suffered by the right holder includes severe damage to the right holder’s business reputation, market share and other interests; and (4) The provision on endangering personal health is deleted, while the circumstance of endangering national security or public interest is retained.

3. Calculation Formula for Punitive Damages

[2021] No. 4 took actual losses, infringement gains and multiples of licensing fees as the calculation base; it did not distinguish between operating profit and sales profit, nor did it prohibit statutory damages from being used as the base. [2026] No. 7 stipulates: Infringement gains shall be calculated based on operating profit; For those engaging in infringement as a profession, calculation shall be based on sales profit; If the profit margin cannot be determined, reference may be made to the average industrial profit margin of the same industry for the same period released by statistical authorities or industry associations, or the profit margin of the right holder; In addition, statutory damages shall not be used as the calculation base for punitive damages.

[2021] No. 4 provided that where a fine or pecuniary penalty has been fully enforced for the same infringing act, the court may take it into account when determining the multiple of punitive damages upon the defendant’s application. [2026] No. 7 deletes the procedural requirement of the defendant’s application; the court shall take it into consideration ex officio.

1. Does the new standard specify a transition period?

Article 35 of the “Measures for the Administration of National Standards (2022)” and Article 21 of the “Measures for the Administration of Industry Standards (2023)” stipulate that a reasonable transition period shall be reserved between the issuance and implementation of the new standards.

The “Measures for the Administration of Local Standards (2020)” does not prescribe a transition period. In practice, however, provincial and municipal authorities generally set a transition period in their local standard administration rules.

The “Provisions on the Administration of Association Standards” also does not prescribe a transition period. Nevertheless, association standards only apply to enterprises that have joined the relevant association, resulting in limited impact scope.

In terms of normative hierarchy, the validity period of industry standards and local standards may be affected by the implementation of national standards. For instance, Article 21 of the “Measures for the Administration of Industry Standards (2023)” stipulates: “After the implementation of the corresponding national standards, industry standards shall be abolished by the competent administrative departments of the State Council on their own initiative.”

In practice, enterprises still need to check whether a transition period is specified in the updated standard, and make appropriate plans and arrangements for raw material procurement, production, sales and other business links in advance.

2. Which standard shall be applied during the transition period?

In accordance with Article 35 of the “Measures for the Administration of National Standards (2022)”, Article 39 of the “Measures for the Administration of Mandatory National Standards” and Article 21 of the “Measures for the Administration of Industry Standards (2023)”, enterprises may choose to implement either the original standard or the updated standard from the issuance date to the implementation date of the standard.

3. How to handle unsold inventory manufactured under the old standard before the new standard takes effect?

Article 25 of the “Standardization Law” stipulates that products and services that fail to comply with mandatory standards shall not be produced, sold, imported or provided. After an updated mandatory national standard comes into force, there is no one-size-fits-all rule on whether inventory goods manufactured under the old standard prior to the implementation date can be sold. For example, upon the implementation of China’s National VI Emission Standard, National V vehicles were prohibited from both production and subsequent sale of existing inventory. By contrast, the “Requirements for Restricting Excessive Packaging of Fresh Edible Agricultural Products” (GB43284-2023) stipulates that fresh edible agricultural products produced or imported prior to the implementation date may be sold until the end of their shelf life.

In principle, enterprises may independently choose the applicable non-mandatory standard. However, it shall be noted that some local regulations may impose non-mandatory standard from the local regulatory perspectives. For example, Hainan province has stipulated that milk tea cups must use fully degradable paper cups. In addition, voluntarily adopted association standards are binding on member enterprises of the association.

4. Are there special points related to imported products?

Enterprises shall pay special attention to the following two points in practice:

First, there is no unified rule governing the applicable timing of new standards for import procedures, which needs case-by-case confirmation. For example, Announcement No. 41 of 2012 (abolished in 2025) previously required the customs to inspect all imported food in accordance with the new national food safety standard based on the inspection application date starting from the implementation date of the newly issued standard. General Administration of Customs Announcement No. 136 of 2022, “Announcement on Relevant Requirements for Import Inspection of Products Such as Infant Formula Foods and Processed Cheese in Compliance with National Food Safety Standards” clearly specifies that products manufactured and imported prior to the implementation of the new national standard and complying with the old standard may continue to be imported and sold within their shelf life in accordance with domestic standard implementation rules and WTO rules. It is recommended that enterprises keep an eye on announcements issued by the General Administration of Customs for specific import and export commodities, and consult the customs in a timely manner in case of ambiguity.

Second, to keep track of updates to both domestic and foreign standards. Article 7 of the “Import and Export Commodity Inspection Law (Revised 2021)” provides that catalogued import and export commodities shall be inspected in accordance with mandatory national standards; if no mandatory national standards are available, inspection shall be conducted in accordance with relevant foreign standards designated by the national commodity inspection authority. Therefore, the basis for inspection is not limited to mandatory national standards.

According to relevant provisions, the procedures for the conclusion and entry into force of a collective employment contract are as follows:

(1) Drafting Stage: Representatives of the employer and the employees reach a consensus through negotiation to formulate the draft.

(2) Voting Stage: The draft shall be submitted to the employee representative congress or all employees for discussion. The discussion shall be attended by more than two-thirds of employee representatives or employees, and the draft shall be adopted only with the consent of more than half of all employee representatives or all employees.

To be noted that, although the “Labor Contract Law” does not restrict the voting method, Article 20 of the “Provisions on Democratic Management of Enterprises” (Zong Gong Fa [2012] No.12) stipulates: “The election and voting on relevant matters at the employee representative congress must follow the principle of the minority submitting to the majority and be adopted by more than half of all employee representatives. Voting on important matters shall be conducted by secret ballot on an item-by-item basis.” Accordingly, some provinces and cities have imposed restrictions on the voting methods. For instance, Article 11 of the “Regulations of Shanghai Municipality on Employee Representative Congresses” prescribes: “The following matters shall be reported to the employee representative congress for deliberation and adoption: (1) Draft collective employment contracts involving labor remuneration, working hours, rest and vacation, insurance and welfare benefits, and other matters…” Meanwhile, Article 31 of the same Regulations states: “Matters deliberated and adopted by the employee representative congress shall be voted on by secret ballot and shall pass only with affirmative votes from more than half of all employee representatives.” Therefore, in Shanghai, it is recommended that such draft involving labor remuneration be adopted by secret ballot. Otherwise, the labor administrative authority may reject such draft at the review stage.

(3) Signing Stage: Upon adoption by voting, the draft shall be signed by the chief representatives of the employer and the employees respectively.

(4) Review Stage: Within 10 days from the date of signing the collective employment contract, three copies thereof shall be submitted to the labor administrative authority for review. The labor administrative authority shall complete the review within 15 days from the date of receiving the document. If any objection is raised, a Review Opinion Letter shall be delivered to the employer and employee representatives. If no objection is raised within the aforesaid time limit, the collective employment contract shall take effect automatically. In judicial practice, if a collective employment contract is not reviewed by the labor administrative authority, the court shall rule that it has no legal effect, such as (2025) Er 05 Min Zhong No.2364 and (2020) Jin 07 Min Zhong No.556.

(5) Publication Stage: The collective employment contract shall be promptly publicized to all employees in an appropriate manner from the date it takes effect.

What if the draft fails to pass the voting stage? For example, due to an economic downturn, a company intends to cut some benefits stipulated in the collective employment contract, while most employee representatives disagree. Article 49 of the “Provisions on Collective Employment Contracts” stipulates that if a dispute arises during the negotiation process, either party may apply to the labor administrative authority for negotiated settlement; even without such an application, the labor administrative authority may take the initiative to coordinate and settle the dispute when it deems necessary. This essentially transforms bilateral negotiation into tripartite negotiation and coordination. Nevertheless, the intervention of the labor administrative authority has its limitations. Its role is limited to coordination and mediation, which does not guarantee a negotiated settlement or the issuance of other binding administrative measures.

What if the term of the existing collective employment contract expires and the new one fails to pass the vote? Hainan province has explicitly stipulated that the relevant terms of the expired collective employment contract shall continue to apply. Although other provinces and cities have not issued similar regulations, they generally follow the same judicial and practical practice as Hainan province.

For employers, when formulating the terms of a collective employment contract, it shall be taken into account that most welfare benefits can generally only be raised rather than reduced. Hence, it would be a good choice to set conditional clauses on welfare benefits, such as, if the company’s revenue drops by X% or the company incurs losses, some welfare benefits may be adjusted or cancelled accordingly.

Similar as the effect of the “Civil Code”, which, upon its implementation, simultaneously repealed nine laws including the “General Principles of the Civil Law”, the “General Provisions of the Civil Law”, the “Contract Law” and etc. The “Civil Code” integrates the content of the nine repealed laws, relevant judicial interpretations, and adds certain new provisions. Similarly, the “Ecological and Environmental Code” consolidates the vast majority of the content of the ten aforementioned laws and introduces new provisions. A brief overview of the Code follows.

1. Structure

The Code consists of five parts: General Provisions, Pollution Prevention and Control, Ecological Protection, Green and Low‑Carbon Development, and Legal Liability, in which, Green and Low‑Carbon Development is a newly added dedicated part, which systematically regulates carbon peaking and carbon neutrality (dual carbon goals), circular economy, and cleaner production.

2. Pollution Prevention and Control

This Part integrates the content of seven pollution prevention and control laws (air, water, soil, solid waste, noise, radioactive, and marine pollution), by which it breaks down the boundaries between pollution media. Key new additions include:

(1) Air Pollution Prevention and Control: To enhance supervision of mobile sources, including railway locomotives and non‑road mobile machinery; strengthen emission control for heavy‑duty trucks, ships, and construction machinery; and set special regulations on catering fume and malodorous pollution.

(2) Water Pollution Prevention and Control: To establish of a risk management, control, and remediation system for groundwater pollution.

(3) Soil Pollution Prevention and Control: To establish a system for the identification and tracking of soil pollution liability, clarifying the responsibilities of the government, enterprises, and third‑party institutions.

(4) Solid Waste Pollution Prevention and Control: To set mandatory recycling obligations for new energy vehicle power batteries, photovoltaic modules, waste plastics, etc. And establish an information platform for inter‑provincial transfer of solid waste and full‑process traceability.

(5) Noise Pollution Prevention and Control: To control noise in key areas such as urban rail transit, aviation, and construction.

(6) Radioactive and New Pollutant Prevention and Control: To set dedicated sections on new pollutants, light pollution, and electromagnetic radiation; establish a new pollutant inventory management system and full‑cycle regulation (risk assessment, control, and governance) of chemical substances.

(7) Marine Pollution Prevention and Control: To establish systems for marine ecological protection red lines, blue carbon sinks, and coastal wetland protection, in alignment with terrestrial ecological protection mechanisms.

3. Ecological Protection

Key newly added provisions include: (1) To set systematic regulation of the principles, procedures, and key areas of ecological restoration activities. (2) To establish an invasive alien species prevention and control system. (3) To adopt the principle of integrated protection and restoration of mountains, rivers, forests, farmlands, lakes, grasslands, and deserts. And (4) To specify restoration procedures and standards for forests, grasslands, wetlands, oceans, mining areas, etc.

4. Green and Low‑Carbon Development

This Part integrates relevant provisions from laws and regulations including the “Cleaner Production Promotion Law”, “Circular Economy Promotion Law”, “Energy Law”, “Energy Conservation Law”, and “Renewable Energy Law”. Unlike the Part on Pollution Prevention and Control, this Part only repeals the “Cleaner Production Promotion Law”; other energy‑related laws remain in force and their relevant provisions must still be complied with. Additionally, this Part establishes a system for controlling total carbon emissions and emission intensity, incorporates the dual carbon goals into national economic and social development plans, and clarifies statutory obligations for carbon reduction. This section incorporates content from the “Interim Regulations on the Administration of Carbon Emission Trading”, which came into force on May 1, 2024.

Overall, the legislative status of the “Ecological and Environmental Code” elevates environmental protection from mere pollution control to ecological conservation and the commercial transformation of ecological resources. In the future, the Part on Green and Low‑Carbon Development will offer significant scope for further research.