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.

Prior to 2026, export controls targeting specific countries/regions mainly involved the United States. On December 3, 2024, the Ministry of Commerce issued Announcement No. 46 of 2024 “Announcement on Strengthening Export Controls on Relevant Dual-Use Items to the United States”. Subsequently, five announcements were issued in 2025, adding varying numbers of U.S. entities to the export control list for dual-use items. In addition, on July 9, 2025, the Ministry of Commerce added eight entities in the Taiwan region to the export control list for dual-use items.

Statements by the Japanese Prime Minister in November 2025 triggered heightened tensions in China-Japan relations. On January 6, 2026, the Ministry of Commerce issued Announcement No. 1 of 2026 “Announcement on Strengthening Export Controls on Dual-Use Items to Japan”. The announcement stipulates that: “The export of all dual-use items to military end-users and for military uses in Japan, as well as to other end-users and for other uses that contribute to enhancing Japan’s military capabilities, is prohibited.”

This announcement is highly concise and bears similarities to the aforementioned Announcement No. 46 of 2024 targeting the United States, yet also differs. Both explicitly prohibit the export of dual-use items to military end-users or for military uses in the target country. The difference lies in Article 2 of Announcement No. 46 of 2024, which further provides: “In principle, export licenses for dual-use items related to gallium, germanium, antimony, and superhard materials to the United States shall not be granted; stricter end-user and end-use reviews shall be imposed on exports of graphite dual-use items to the United States” — a clearly operational provision. However, Announcement No. 1 of 2026 does not include similar prohibitions or strict restrictions on specific dual-use items. Beyond banning exports of all dual-use items to military end-users and for military uses in Japan, Announcement No. 1 of 2026 adds the phrase “as well as to other end-users and for other uses that contribute to enhancing Japan’s military capabilities”, which laying groundwork for the subsequent release of a watch list.

Overall, Announcement No. 1 of 2026 has broad coverage but lacks specific targeting. It is more declaratory or cautionary in nature, rather than a set of operational rules.

Nevertheless, tensions escalated further thereafter. On February 24, 2026, the first business day after the 2026 Spring Festival holiday, the Ministry of Commerce issued two announcements.

Among them, Announcement No. 11 added 20 Japanese entities involved in the military and defense industries to the export control list. For entities on the control list, the export of dual-use items to them is explicitly prohibited and shall cease immediately. With reference to the earlier export control lists targeting the United States, such a control list represents a standard practice.

Announcement No. 12 added 20 Japanese entities to a watch list, on the grounds that the end-users and end-uses of dual-use items cannot be verified. The announcement does not ban exports of dual-use items to entities on the watch list, but explicitly prohibits applications for general licenses or obtaining export vouchers through registration and declaration. Meanwhile, applicants for individual licenses must submit a risk assessment report and written commitments regarding entities on the watch list. Furthermore, the announcement stipulates that entities that fulfill their obligation to cooperate in verification may be removed from the watch list upon application and verification by the Ministry of Commerce.

The legal basis for the watch list is Article 26 of the Regulations on the Administration of Export of Dual-Use Items, marking its first practical application. In terms of industries involved, unlike the control list, entities on the watch list are mostly enterprises related to automobiles, electronic components, and raw materials. Upon closer examination of their backgrounds, the Ministry of Commerce of China appears to have targeted entities with potential diversion from civilian to military applications, strengthening end-user and end-use reviews to prevent military use. In other words, this reflects a shift in dual-use item administration from purely regulating the “items” themselves based on whether they qualify as dual-use, to governing end “uses” and “users” through supply chain scrutiny.

In view of the above announcements and circumstances, it is urgent and critical for Japanese companies or enterprises exporting to Japan to take proper measures. In general, the following measures could be taken into consideration.

First, to conduct an inventory of whether exported products fall under dual-use items.

Second, if dual-use items are involved, to clarify and map out the supply chain. Monitor whether entities in the supply chain have been included in the control list or watch list, or are suppliers to listed entities, to assess the existence and magnitude of risks.

Third, to establish a compliance management system for export control response, which mainly includes: (1) Regarding the corporate operation, to demonstrate integrity and independence across organization, management, transactions, and other aspects. (2) To design operational rules for customer screening, item and technology screening, contract clause optimization, supply chain management, etc, which not only projects the enterprise’s compliance image but also effectively prevents risks through daily management. And (3) To establish a crisis early warning and response mechanism. In the event of medium or high-risk incidents or indicators, enable prompt and effective actions, timely submission of supporting evidence, and proper response.

In practice, when implementing employee job transfers, many employers only focus on whether the employee handbook stipulates the employer’s right to unilaterally adjust positions, while ignoring the special requirements applicable to positions exposed to occupational disease hazards.

In fact, given the potential impact on employees’ health posed by positions exposed to occupational disease hazards, when transferring an employee to such positions, the employer shall inform the employee, and reach a mutual consultation according to the “Law on the Prevention and Control of Occupational Diseases”. Paragraph 2 of Article 33 thereof states: “Where, during the term of an existing labor contract, a worker engages in operations involving occupational disease hazards that were not disclosed in the labor contract due to a change in job position or job content, the employer shall fulfill its obligation of truthful disclosure to the worker in accordance with the provisions of the preceding paragraph, and negotiate amendments to the relevant clauses of the original labor contract.” If an employer violates this provision, according to Paragraph 3 of Article 33: “The worker shall have the right to refuse to engage in operations involving occupational disease hazards, and the employer may not terminate the labor contract concluded with the worker on such grounds.”

Therefore, an employer’s right to manage and adjust employment is restricted when transferring an employee to a position involving occupational disease hazards, and mandatory provisions of the aforementioned laws must be implemented. There are many cases in judicial practice have proved this opinion. This opinion has a reasonable logic, that is, if an employer’s right to manage employment were to take precedence over Paragraph 2 of Article 33, that provision would undoubtedly become a dead letter. Furthermore, an employer could recruit a worker for a position free of occupational hazards, then easily transfer the worker to a position exposed to such hazards by exercising its unilateral job transfer right, which would effectively render Article 8 of the “Labor Contract Law” and Paragraph 1 of Article 33 of the “Law on the Prevention and Control of Occupational Diseases” meaningless.

Then if we transfer an employee from a position exposed to occupational disease hazards to a non-hazardous position, is there any risk? The answer is positive. Special attention must be paid to the following matters:

First, Article 35 of the “Law on the Prevention and Control of Occupational Diseases” requires that an employee be transferred to another position if found to have suffered health damage related to the occupation. Therefore, in such circumstances, transferring the employee from a position exposed to occupational disease hazards to one free of relevant occupational disease risk factors is a statutory obligation of the employer.

Second, the job content of the new position shall be reasonable to the employee’s physical condition, as well as the reasonableness of any salary adjustment (positions exposed to occupational disease hazards usually include hazard allowances and thus may offer higher pay than other positions at the same level). For job transfers made on statutory grounds, the salary reduction should not be excessive, and the salary level of other employees in the same post after transfer shall be taken into account.

In addition, in practice, where an employee falls under the circumstances requiring mandatory job transfer under Article 35 of the “Law on the Prevention and Control of Occupational Diseases”, the employee may propose to waive the transfer and voluntarily sign a commitment letter for reasons such as seeking higher income. If the employer accepts such an arrangement, it will face the risk of being penalized. Pursuant to Article 75 of the “Law on the Prevention and Control of Occupational Diseases”, the employer shall be ordered to make corrections and imposed a fine of not less than CNY50,000 but not more than CNY300,000; if the circumstances are serious, heavier penalties shall apply. In such cases, if the employee insists on refusing the transfer, the company may, on the basis of retaining relevant evidence, terminate the labor contract pursuant to Article 40 of the “Labor Contract Law” on the ground that a “major change in the objective circumstances” has rendered the original contract unperformable and no agreement can be reached through consultation.

Recognition and registration of technology contracts are not mandatory requirements, instead they are conducted on a voluntary application basis. What are the benefits of such procedures? Similar to copyright registration, its main value lies in proving ownership and the formation date of rights in the event of infringement disputes. If procedures have been completed, the registration certificate will serve as strong evidence in subsequent disputes over infringement, breach of contract, or other claims.

This 2026 revision introduces several major changes:

First, the scope of registrable contracts adds more type. On the basis of the 4 contract types specified in the 2000 version—technology development contract, technology transfer contract, technology consulting contract, and technology service contract—technology license contract is newly added. This addition is highly necessary. In cases of patent infringement or trade secret misappropriation, where the infringer’s gains or the right holder’s losses cannot be determined, royalty fees serve as a key reference for calculating compensation. In many cases, however, infringers defend by claiming that the license contract was forged after the infringement. Registration effectively defeats such defenses. Right holders should also ensure that payment and invoicing comply with the contract to form a complete chain of evidence.

Second, adjustment of the registration party. The 2000 version required registration by the seller. The 2026 version addresses frequent disputes in practice by adding two scenarios: (1) If the seller is reluctant to register, the buyer may register upon mutual agreement of all parties; and (2) For contracts with multiple sellers, each seller shall register separately at its locality based on its respective transaction volume. It shall be noted that registration by the buyer is not automatic when the seller refuses, and it requires the seller’s consent. This rule ensures that registration decisions are made by the right holder and prevents improper acts such as forgery of technology contracts by the buyer.

Third, confidentiality protection. The 2026 version adds provisions requiring that technology contracts involving state secrets be registered after declassification processing, or be submitted for recognition and registration to registration institutions with confidentiality qualifications. It is a pity that such special requirement could not be applied to ordinary trade secrets. Given the importance of trade secret protection, enterprises may also consider applying for recognition and registration at institutions with confidentiality qualifications.

In judicial practice, the key to determining the validity lies in whether there is an identifiable main contract or fundamental principal claim.

Firstly, if the guarantee contract specifies the title of the main contract, it cannot be extended to other contracts. For example, in the case (2019) Xin 01 Min Chu No. 612, the guarantor undertook joint and several liability for debts under the Framework Agreement. However, the parties did not perform the Framework Agreement but separately signed a General Engineering Construction Contract and other agreements. The creditor later demanded liability based on these later agreements and the guarantee. The court held that the main contract was limited and could not be extended to other separate agreements for the same business.

Secondly, the validity shall be determined based on the interpretation of “all contracts” shall be determined by the context, wording, and circumstances of signing. In the case (2013) Zhe Hang Shang Wai Chu No. 2110, the court interpreted the term “all contracts” in the guarantee by comparing it with “accessory contracts” used elsewhere in the same clause. Combining the facts that Company J authorized the legal representative of Company JT to handle the coal tar cooperation and sign the Cooperation Agreement, the court held that Company J knew the status of all existing contracts and the creditor’s demand for additional security. The guarantee for “all contracts” was interpreted as covering all outstanding business contracts between Company JT and Company W, and the court upheld Company W’s claim.

Thirdly, the validity shall be recognized based on the principle of party autonomy. In the case (2023) Su 0214 Min Chu No. 6515, the Guarantee Contract stipulated that the principal debt contracts included all contracts (both existing and future) signed between the Company A and the Company B. Afterward, multiple sales and procurement contracts were executed. The court ruled that requiring the guarantor to bear joint and several liability for these debts complied with the law and the agreement, and supported the claim.

In addition, the signing dates of the principal and guarantee contracts may also be taken into consideration. In the case (2022) Yu 0527 Min Chu No. 2289, the guarantee undertaking was signed in 2015, while the principal contract was signed in 2016. The court held that the one-year-earlier guarantee could not be deemed to correspond to the later principal contract.

In summary, in judicial practice, there is no unified judicial standard has been formed, so judges would define the relationship between the principal contracts and the guarantee contracts case by case. Given the accessory nature of guarantee contracts, the above-mentioned issues shall be taken into consideration in defining the validity regarding the relationship between the principal contracts and the guarantee contracts. Therefore, for enterprises, it is recommended to avoid the above issues.

In the early days, most judgments were rendered in accordance with Article 26 of the “Explanations on Certain Clauses of the Labor Law” (Lao Ban Fa [1994] No. 289, hereinafter referred to as “No.289”), which states: “Objective circumstances refer to the occurrence of force majeure or other situations that render all or part of the contract clauses unperformable, such as relocation, merger, or asset transfer of the enterprise.”

Nevertheless, as time goes by, the domestic and international economic environment, as well as China’s implementation of full national treatment for both domestic and foreign-funded enterprises, have changed drastically compared with 1994. Local jurisdictions have adopted a relatively broader standard in defining “material changes in objective circumstances”.

Article 79 of the “Answers to the Trial of Labor Dispute Cases (I) issued by the Higher People’s Court of Beijing Municipality and the Beijing Labor and Personnel Dispute Arbitration Commission” (Jing Gao Fa Fa [2024] No. 534) stipulates: “ ‘Material changes in the objective circumstances on which the labor contract was concluded’ refer to unforeseeable changes occurring after the conclusion of the labor contract, which render all or the main clauses of the labor contract unperformable, or make continued performance obviously unfair due to excessive costs, thus frustrating the purpose of the labor contract.” This provision also lists more situations constituting material changes in objective circumstances, including production restructuring, corporate restructuring, changes in the business scope of franchised enterprises, etc. However, in judicial practice in Beijing, courts still keep a relatively conservative and caution in defining such material changes.

Although Shanghai has not issued specific provisions, its judicial criteria have also changed since 2020. In some cases, courts have exceeded the scope prescribed by No. 289. For example, in the case (2021) Hu 01 Min Zhong No.15455, the court held that, “The situations covered by No.289 are merely illustrative examples and not exclusive. If an employer indeed needs to adjust or change its organizational structure due to market conditions, international competition, technological innovation, etc., such situations shall also be recognized as material changes in objective circumstances.” However, courts still keep a relatively conservative and caution in defining such material changes.

However, since the end of 2025, judicial practice in Shanghai has shown a further relaxing trend, that is, “Situations such as department dissolution or merger are often recognized as material changes in objective circumstances, provided they are not caused by pure business decisions.” This trend means that amendments to labor contracts—such as organizational restructuring and salary adjustments—resulting from a deteriorating economic environment and operational difficulties are more likely to be supported by judicial authorities.

It should be noted that the procedure on defining material changes in objective circumstances shall be completed, which means there shall be a failure to reach an agreement on the amendments to labor contracts. Meanwhile, the amendments on the adjustment of positions and relevant terms after negotiation shall be operational and reasonable.

To strengthen the legislative regulation of hazardous chemicals, the “Law on the Safety of Hazardous Chemicals” was officially issued on December 27, 2025. This marks the upgrade of hazardous chemicals safety administration from the administrative regulation level to the law level. The new law introduces reforms in concepts, structure, liabilities, supervision and technical means to establish a sound safety governance system covering the entire life cycle of hazardous chemicals. The key points of the new law are as follows:

1.More diversified supervision methods

In the past, the primary supervision method was the enterprises’ responsibility system, where only the principal persons in charge were held liable for serious consequences. However, Article 5 of the new law stipulates the implementation of the “full staff work safety responsibility system”, the “dual prevention mechanism for hierarchical control of safety risks and hidden danger investigation and treatment”, and “work safety standardization and information-based supervision”, while emphasizing the “comprehensive responsibility system of the principal persons in charge”. The more diversified supervision methods stipulated in the new law are actually consistent with the tendency of the revised “Work Safety Law” in recent years, which is to assign more liabilities to individuals, take people as the starting point, and stimulate the motivation for prevention.

2.Source control

Previously, hazardous chemicals enterprises were encouraged to move into designated parks. The new law sets up a special chapter to regulate the planning and layout of hazardous chemicals. In short, all newly-built or expanded production projects must be located in designated parks from now on. In fact, since 2010, many provinces and cities have practically guided hazardous chemicals enterprises to relocate and formed relevant parks. However, the new law stipulates a number of hard indicators for parks, and it will be a challenge to determine whether the existing parks built in the past need to be renovated or relocated.

3.Technology-enabled supervision

With the development of information technology, the new law also incorporates technology-enabled supervision methods such as information-based supervision, automatic control, satellite positioning, and even monitoring of drivers’ driving behavior and fatigue levels.

4.Strengthened penalties

In the past, the maximum fine was CNY 1 million, the fine for most violations was below CNY 200,000, and penalties on individuals were rare. The new law not only sets fixed fine amounts, but also adds a multiple fine method based on the value of the goods. At the same time, a dual penalty system, that is, imposing penalties on both the entity and the individual, which is established for most illegal acts. This revision is also consistent with the tendency of the “Work Safety Law”.

After the implementation of the new law, the provisions of the “Regulations on the Safety Administration of Hazardous Chemicals” that do not conflict with the new law shall remain in force and must still be complied with. In the future, the relevant departments may revise and improve the “Regulations on the Safety Administration of Hazardous Chemicals” to adapt to the new safety management needs.