China expands trade secret rules to shield AI algorithms and data from foreign access

China Trade Secret Rules Expand to Cover AI and Data

China has implemented comprehensive new trade secret protection regulations that explicitly classify algorithms, datasets, and computer programs as proprietary secrets for the first time in Chinese law. The Regulations on Trade Secret Protection, which took effect on Monday, represent the first major update to China's trade secrets framework since 1998 and mark a significant escalation in Beijing's efforts to prevent technology leaks 1

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Under the new framework, any information related to technology—including structure, raw materials, formulas, materials, samples, patterns, processes, methods, data, algorithms, computer programs, and codes—now qualifies as a trade secret, provided it is not publicly known, has commercial value, and remains confidential 1

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. Information already described in media reports or open documentation falls outside the regulation's scope.

Safeguarding AI Advancements Through Strict Security Measures

The new trade secret protection regulations impose stringent security requirements for remote work security requirements and cross-border collaboration security. Companies operating in China must now implement protective measures including access controls that limit file access by employee rank, data anonymization to mask personally identifiable information, and detailed logs tracking who has accessed, copied, or modified sensitive data 1

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The State Administration for Market Regulation (SAMR) has launched a month-long enforcement campaign focusing on key sectors including biomedicine, semiconductors, and AI. The agency has vowed to crack down on "malicious poaching" and employees who change jobs while carrying trade secrets. Individuals and companies can report suspected violations, and confirmed breaches could result in fines up to 5 million yuan (€630,000) 1

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Shielding Key Technologies Amid Strategic Competition

The regulations represent Beijing's latest move in shielding key technologies as strategic competition with the United States intensifies. The People's Daily, the ruling Communist Party's flagship newspaper, praised the measures for adapting to the digital era, noting that "digital assets such as data, algorithms, computer programs, and code have become core trade secrets for enterprises" 2

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The rules also target infringement on trade secrets committed outside the country, though enforcement mechanisms remain unspecified. This extraterritorial reach signals Beijing's determination to protect domestic innovation as China climbs the global value chain 2

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Preventing Technology Leaks Through Multiple Channels

China has deployed multiple strategies for preventing technology leaks beyond the new regulations. In April, Beijing ordered Meta Platforms Inc. to unwind its $2 billion acquisition of agentic AI startup Manus, which started in China but relocated to Singapore. The government is also restricting overseas travel for AI talent at private firms such as Alibaba Group and DeepSeek 2

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Concurrently with the trade secret rules, China's cabinet released separate regulations to strengthen oversight of outbound investment. These rules prohibit domestic investors from transferring restricted goods, technology, or data overseas without prior approval, and ban companies from providing technical training that facilitates foreign acquisitions of sensitive capabilities 2

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AI and Data Protection as Economic Priority

The Chinese state is conducting an "Enterprise Trade Secret Protection Capacity Enhancement Service" throughout June, a program it has run annually since 2023. During this month, authorities will hold business trainings to "cultivate awareness" of the new regulations and conduct risk assessments with companies 1

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According to state broadcaster China Central Television, this marks the first time Chinese law protects digital assets such as algorithms and datasets as proprietary secrets, underscoring Beijing's recognition that AI and data protection have become critical to maintaining competitive advantages in the digital economy 2

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. The legal push reflects broader efforts to lock down domestic innovation as China positions itself as a global technology leader.