China's supply chain decrees and what they mean for human rights due diligence
14 July
For years, the central challenge of human rights due diligence in global supply chains has been getting companies to take it seriously enough. Two Chinese government decrees, published in spring 2026, have changed the nature of that challenge – introducing additional complexity that practitioners, legal advisers, and businesses sourcing from China are only beginning to work through.
What has changed?
On 31 March 2026, China’s State Council published Decree 834 on Industrial and Supply Chain Security. On 7 April, it followed with Decree 835 on Countering Improper Extraterritorial Jurisdiction by Foreign States. Both took effect immediately, with no transition or grace period.
As Linklaters has noted in its analysis, these decrees form part of a broader trend – China has been steadily building a legal framework to respond to foreign sanctions, export controls, and other measures it considers overreaching, beginning with the Unreliable Entity List in 2020, followed by its Blocking Rules and the Anti-Foreign Sanctions Law in 2021. Decree 834 and 835 represent a further development of that architecture.
What do the decrees say?
The most immediate question for HREDD practitioners concerns Decree 834. Article 13 prohibits investigative or information-gathering activities concerning the industrial or supply chain by foreign entities without approval, and no implementing guidelines have been issued to clarify what that means in practice.
As law firm Steptoe has observed, supply chain due diligence could potentially become a heightened risk area as a result. Activities that may warrant review include supply chain mapping, human rights due diligence, supplier questionnaires, on-site supplier audits, and structured data collection tied to foreign compliance regimes such as UFLPA or CSDDD.
Decree 835 introduces a second layer of complexity for companies that identify human rights risks and want to act on them. Terminating Chinese suppliers or customers to comply with foreign sanctions or export controls is now a high-risk activity – such actions trigger both orders simultaneously, and companies may risk potential administrative designation and civil litigation initiated by the terminated party.
The decrees are already being enforced. The first civil settlement under China’s Anti-Foreign Sanctions Law reached RMB 99.7 million, and MOFCOM invoked its blocking rules for the first time on 2 May 2026. In May 2026, China’s Ministry of Justice issued its first formal determination under Decree 835, finding that the European Commission’s investigation into Nuctech under the EU’s Foreign Subsidies Regulation constituted improper extraterritorial application of foreign law.
The compliance question this raises
Several legal commentators have noted the tension between these decrees and existing obligations in other jurisdictions. Decree 834 introduces new restrictions on supply chain information collection, creating direct conflicts for companies attempting to comply with EU CSDDD or US UFLPA requirements. As Morgan Lewis has put it, conducting ESG, forced labour, or supply chain audits in China to comply with the EU CSDDD or US UFLPA directly conflicts with the information collection restrictions in Decree 834.
Legal advisers are currently working through what this means in practice. Where conflicts arise, legal advisers suggest that early engagement with authorities on both sides is likely to be more effective than waiting until a problem has developed.
Linklaters recommends that companies review their supply chain audit and due diligence programmes, take legal advice on structuring their programmes to minimise exposure, and monitor implementing guidelines as they are issued, as the scope of these instruments will become clearer over time.
A different signal from Beijing
Against this backdrop, it is worth noting another recent development. China’s National Human Rights Action Plan (2026–2030), released on 11 June, includes a stated policy objective to strengthen guidance on corporate social responsibility, follow the UN Guiding Principles on Business and Human Rights, and improve enterprises’ awareness and capacity for human rights due diligence. This is a stronger emphasis on business and human rights than appeared in the previous plan – and it opens questions about how the UNGP framework might serve as a constructive common reference point for dialogue between Chinese businesses and international partners on HRDD, even as the legal environment around specific due diligence activities remains uncertain.
Whether and how these two trajectories – the new supply chain security decrees on one hand, and the NHARAP’s UNGP commitments on the other – develop in parallel is something practitioners will be watching closely.
What this means in practice
None of this means HREDD with Chinese supply chains should be abandoned. Regulatory obligations remain, and the expectations on companies under EU and UK legislation continue to develop.
What it does mean is that HREDD programmes need careful review in light of the current legal landscape, ideally with legal input on what is and is not permissible under Chinese law. The tension between different jurisdictions’ requirements is something that boards and senior leadership need visibility on – sustainability teams should not be expected to carry this alone.
