DCC Regulatory & Policy Update 01/26
- hans.au
- Jan 30
- 8 min read
Updated: 15 hours ago
January 2026
Contents
As we look at 2026, several regulatory and policy trends are emerging in China that foreign companies, and those considering engagement with China, need to understand. These developments aren’t just bureaucratic adjustments: they will influence how businesses operate, invest, and make decisions across borders.
Below are five key areas where policy shifts are expected or already underway and how they may affect your strategy this year.
1. E-Visa and Entry Policy Evolution: Easier Travel, More Conditional Access
China’s visa and entry policies have been relaxed in the last 2 years, including temporary visa-free entry windows for certain nationalities. For 2026, China is expected to move toward more digital and conditional visa regimes for business travelers.
New Visa and Transit Rules:
As of 17 December 2025, the continuation and extension of a 240-hour (10-day) visa-free transit policy for eligible foreign travellers from ~55 countries, allowing visa-free stays of up to 10 days in certain cities: one requirement is proof of transit (onward travel) to a third country. Data released as of January 2026 shows over 40.6 million foreign entries under this regime in its first year, supporting inbound travel and tourism growth.
As of 3 November 2025, China has extended its unilateral 30-day visa-free entry (for tourism, business, and related short stays) for citizens of many countries: the visa-free entry policy was extended to over 40 countries, including France, Germany, Italy, the Netherlands, Spain, Switzerland, Ireland and Hungary, effective until 31 December 2026. Sweden was added to the scheme effective 10 November 2025. Whether the UK will be included soon is currently unclear.
Time-limited visa-free entry arrangements with certain Latin American and Middle Eastern countries for economic or tourism purposes (dates are range periods): including for example Brazil, Argentina, Chile, Uruguay from 1 June 2025 – 31 May 2026, and others from 9 June 2025 – 8 June 2026. 15 September 2025 – 14 September 2026; Russian citizens may enter China visa-free up to 30 days under a separate arrangement.
Why this matters:
Easier short-term access accelerates short-term travel for deal negotiations, due diligence, and business development.
However, digital tracking and compliance requirements may rise in parallel, meaning that easier entry may come with more reporting obligations and data collection.
What to watch:
Expansion of electronic visa options for EU countries, and Latin American business travellers.
Pilot programs linking visa validity to specific business activities or accredited programs.
2. Data, Cybersecurity & Digital Regulations: Enforcement Overhaul
China’s data, cybersecurity & digital framework has been evolving since the enforcement of the “Personal Information Protection Law” (‘PIPL’, effective 1 November 2021), the “Cybersecurity Law” (‘CSL’, effective 1 June, 2017), the “Data Security Law” (‘DSL’, effective 1 September 2021) and other important legislation related to control and handling of information and relevant digital infrastructure. In 2026, enforcement emphasis is expected to shift from rule-making to more dynamic, risk-based enforcement, especially for cross-border data flows, cloud usage, and third-party data processors.
New CSL Requirements since 1 January 2026:
Expanded Extraterritoriality: while the CSL was previously focused on liability of overseas actors for attacks, intrusions, interference, or damage targeting China’s critical information infrastructure, it can now be applicable to any act of overseas entities/individuals deemed harming China's national cybersecurity.
Increased Penalties: the previous fines in the CSL have been increased with the top end being RMB 2 million -10 million for serious breaches, and the government can disable apps or revoke licenses.
AI Integration: introduces the broader government support for AI R&D and strengthens government supervision of AI risk.
Streamlined Enforcement: introduces leniency for minor/corrected violations and new penalty measures.
Why Cyber Regulations matter:
Foreign companies operating ERP, Cloud, R&D, or shared service centres, or integrating China-based data into global systems, face stricter regulatory requirements and must assess and, where necessary, upgrade internal data and cybersecurity compliance procedures, including security standards and protocols, data localization obligations, and approvals for cross-border data transfers.
Voluntary Companies involved in AI R&D, algorithmic development, or related infrastructure should expect more detailed regulations on opportunities and also increased compliance pressure regarding ethics, risk monitoring, and security of AI.
Due to the rapidly growing complexity of regulatory requirements and increased government scrutiny, companies of a certain size should consider implementing cyber and data compliance training, clearly assigning internal responsibilities, and putting appropriate standards and protocols in place.
What to watch:
Q1–Q2 2026 clarifications from Cyberspace Administration of China (‘CAC’) or related ministries.
Sector-specific guidance for manufacturing, supply chain SaaS platforms, and cross-region ERP systems, particularly for the manufacturing, automotive, healthcare, finance industries.
Increase in compliance spot checks and expanded government security assessments for cloud services, industrial data platforms, and AI training datasets.
3. Foreign Investment Laws: Balancing Self-Reliance with Foreign Capital Needs
China’s foreign investment regime in 2026 is marked by continued openness in strategic sectors (notably advanced manufacturing, tech, green energy) with an update of the important “Catalogue of Industries Encouraged for Foreign Investment” (’Catalogue’), but with increased scrutiny on compliance, national security, and alignment with China's economic goals, balancing China's ongoing drive for self-reliance with its need for foreign investment.
New Catalogue effective 1 February 2026:The updated Catalogue, issued on 15 December 2025 and effective as of 1 February 2026, together with the “Special Administrative Measures for Foreign Investment Access” (the so-called ‘Negative List’), whose most recent versions took effect on 1 November 2024 and 1 June 2025, serves as the primary guidance on which industry sectors are open to foreign investment. The Catalogue classifies investment projects as ‘encouraged’, ‘permitted’, ‘restricted’ or ‘prohibited’, reflecting a continued regulatory trend toward selective sectoral openness and targeted easing, rather than broad-based liberalization.
Why this matters:
Foreign investment in certain high-tech, green tech, and advanced manufacturing are now ‘encouraged’ and welcomed by the government, including notably: petroleum/nuclear processing, cutting-edge pharmaceutical R&D and localization of innovative drugs, high-end medical and testing equipment, opto electronics, fuel-cell materials, smart energy systems, advanced alloys, underwater and humanoid robotics, gas power equipment, and brain–computer interface components (including brain-inspired chips).
The Catalogue prioritizes expanding producer services, especially in generative AI, intelligent robots, large language models, new-materials service platforms, high-end shipping, and virtual power plant operations. It also boosts service consumption by adding lifestyle and tourism-related services such as pet care, sports tourism, travel agencies, camping and B&B services, property management, and online healthcare.
The Catalogue also touches on the 2 decades old policy of encouraging foreign investments in specific provinces, specifically the central-western region (中西部), the north-eastern region, and Hainan, setting out region-specific investment projects tailored to local conditions.
Investment projects listed in the Catalogue as ‘encouraged’ may receive duty-free imports of self-use equipment, priority land supply at discounted transfer prices, a reduced 15% corporate income tax rate in western China and Hainan and other preferential treatment. Also, foreign investors who reinvest dividends into eligible Catalogue projects may qualify for a tax credit on the reinvested profits.
What to watch:
The ‘Catalogue’ is a list where tax, land and approval incentives apply (or not), but does not guarantee any access and therefore can’t override the Negative List. Hence, practitioners should always check the Negative List first.
Certain investment categories are not listed in the ‘Catalogue’ as ‘restricted’ and are also not mentioned in the ‘Negative List’ but may still be regulated by security or industry sector regulations, meaning an investment project may fail security reviews, inspections or control requirements. Examples: investments in data, cyber and information infrastructures are not prohibited but are practically high risk if nature and scale of the project may touch or cross thresholds such as ‘core’ (in ‘core telecom services’) or ‘critical’ (‘critical information infrastructure operation’). Similar for advanced sensors, high-end equipment, precision components or new materials, which fall as ‘advanced manufacturing’ into the ‘encouraged categories’, but may be practically closed if export control laws, dual-use export regulations, or end-user scrutiny apply.
Expect continued political sensitivity around data, cyber & information infrastructures, media, education and advanced or defence-adjacent manufacturing sectors.
Sector-specific guidance from authorities such as CAC, the Ministry of Industry and Information Technology (‘MIIT’), the Ministry of Commerce (‘MOFCOM’) and the National Development and Reform Commission (‘NDRC’) provides clarification on which activities are not considered security- or sector-sensitive.
4. Export Control Policies: Critical Supply Chain & Dual-Use Focus
Recent and anticipated geopolitical developments, including US-China relations and regional tensions, are shaping China’s approach to export controls and supply chain policy. Building on the general principles established in the “Export Control Law” (effective 1 December 2020), and the more recent “Regulations on Export Control of Dual-Use Items” (effective 1 December 2024), China has significantly expanded its regulatory framework. These regulations introduce administrative measures, such as end-user verification, audits, on-site inspections, blacklisting, and certain extraterritorial controls covering dual-use goods, technologies, software and services. Further detailed enforcement measures and regulatory guidance have already been issued and are likely to continue.
New Catalogue of Dual-Use Items and Technologies & Other Notices:
The “Catalogue of Dual-Use Items and Technologies Subject to Import & Export Licensing” (‘Dual-Use Catalogue’) was issued in December 2025 and is effective since 1 January 2026. This is an annual update defining which export items require a license in 2026. Licenses are expanded into the following areas: sensors (including certain Micro-Electro-Mechanical Systems (‘MEMS’)), RF components, advanced materials, measurement & inspection equipment, etc. General Administration of Customs of China (‘GACC’) enforcement is now automated based on this against the Dual-Use Catalogue. A note to practitioners: if an export item is not listed in this Dual-Use Catalogue, the export control risk is lower; if it is, licensing is unavoidable.
The “Announcement on Strengthening Export Controls of Dual-Use Items to Japan”, issued on 6 January 2026 and immediately effective, tightened controls on the prohibition of export of dual-use items for military end-uses and end-users in Japan.
A flurry of Notices of MOFCOM and GACC in November 2025 were targeted at geopolitically particularly sensitive raw materials and related downstream products, namely: super hard materials and related items, certain rare-earth equipment and materials, medium and heavy rare earth items, lithium batteries, and artificial graphite anode materials (MOFCOM Notices No. 55, 56, 57, 58, 61 and 62). However, the implementation of these Notices was later suspended pending further assessment.
In conjunction with the Dual-use Catalogue, MOFCOM and GACC also published general export and import licence management goods lists for 2026 applicable alongside the dual-use list in China’s export control regime and affect licensing obligations for broader categories of goods, dual-use and otherwise (“Export License Management Goods Catalogue” (2026), published 30 December 2025, effective 1 January 2026; “Import License Management Goods Catalogue” (2026), published 30 December 2025, effective 1 January 2026).
Why this matters:
Foreign buyers and China-based producers in sectors like robotics, EVs, clean energy, and advanced electronics need to familiarize themselves with the new Dual-Use Catalogue and clarify whether licenses need to be obtained.
Foreign buyers and Chinese exporters of rare earth raw materials or of lithium batteries & artificial graphite anode materials need to regularly monitor and enquire with national and local MOFCOM departments for any activation of export control measures, which are not off the table.
While no formal incentive scheme has been announced, China’s export control and industrial policy framework allows authorities to apply discretion, which, in practice, has historically favoured stable, long-term supply relationships.
What to watch:
Businesses that engage with the following products for export, whether as manufacturer, buyer or service provider, will need to take a vigilant and proactive approach in monitoring for potential changes in export controls and expect a very dynamic regulatory environment: advanced sensors (incl. MEMS); RF and microwave components; semiconductor manufacturing & inspection equipment; advanced materials; software, technical data, and services tied to controlled hardware.
In 2026 MOFCOM, GACC, MIIT may issue export control-related notices rapidly, and on an ad-hoc basis, potentially outside normal regulatory cycles (such as annual control list updates), in response to geopolitical developments, technology choke point concerns, or as trade-related signalling measures.
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