The global challenges facing China during the first six months of 2025 have led the country to take various measures aimed at strengthening the Chinese market (see, e.g., China’s Unified National Market and Local Protectionism) and reducing international risks.  One such measure is the revision of China’s Anti-Unfair Competition Law to combat unfair practices at home and overseas.  Likely inspired by a case decided by the Supreme People’s Court in 2021, the revised law’s extraterritorial reach is expected to impact Chinese and foreign companies significantly.

The Revised Anti-Unfair Competition Law

“The importance of the domestic market is reflected in data shared by the National Development and Reform Commission, […].”

Challenges outside China have made the domestic market more important than ever.  The importance of the domestic market is reflected in data shared by the National Development and Reform Commission, which just reported that, from 2021 to 2024, the average contribution of domestic demand to the country’s economic growth was 86.4%.

However, the ongoing race-to-the-bottom competition in the domestic market—primarily in the form of vicious price wars to compete for market share—and the unfair treatment that small and medium-sized businesses have experienced in their dealings with larger businesses are problems that must be solved.  Potential solutions were offered in late June, when China revised its Anti-Unfair Competition Law (“Anti-Unfair Competition Law 2025”), which will become effective on October 15.

The Anti-Unfair Competition Law 2025 has 41 articles, compared with 33 in the current version.  Among the new articles is Article 14, which prohibits companies running online platforms from setting rules to “force or covertly force” businesses using their platforms to sell goods at prices below cost.  If found to violate Article 14 and “the circumstances are serious”, companies running online platforms can be subject to a fine of up to RMB 2 million.

Article 14 and the related punishment have clearly been adopted to address concerns that some large-scale online platform operators have, for the purpose of attracting more consumers, pressured businesses using their platforms to sell at unreasonably low prices, causing severe disruptions of the market order.

The Law’s Extraterritorial Reach and a 2021 Case

Another major addition of the Anti-Unfair Competition Law 2025 is Article 40, which states that “any act of unfair competition, as provided for in this Law, carried out outside the territory of the People’s Republic of China” to “harm the legal rights and interests of domestic business operators or consumers” shall be dealt with in accordance with the Anti-Unfair Competition Law 2025 and other relevant laws.

“Article 40 fills a gap in the current Anti-Unfair Competition Law that received attention a few years ago, when a Chinese group sued an international telecommunications group in the Guangzhou Intellectual Property Court.”

Article 40 fills a gap in the current Anti-Unfair Competition Law that received attention a few years ago, when a Chinese group sued an international telecommunications group in the Guangzhou Intellectual Property Court.  Alleging that the international group had carried out acts of unfair competition during their negotiation regarding licensing of the international group’s standard essential patents (i.e., patents that protect technologies essential to the implementation of specific technical standards), the Chinese group claimed damages to cover economic losses caused by the international group’s acts.  The international group challenged the lawsuit, arguing that the Guangzhou Intellectual Property Court lacked jurisdiction because the alleged acts of unfair competition occurred outside China.

The case was ultimately decided by the Supreme People’s Court in 2021.  The highest court ruled against the international group, stating that, based on relevant provisions of China’s Civil Procedure Law and related judicial interpretation, lawsuits filed alleging infringement of rights would be deemed to be under the jurisdiction of Chinese courts located at the places “where acts of infringement were carried out”, “where results of infringement occurred”, or “where the defendant resides”.  In this case, the Guangzhou Intellectual Property Court had jurisdiction because the alleged acts of unfair competition, if proven, could lead to adverse impact on the Chinese group’s operation in a city that was within the jurisdiction of the court.

In an official database of exemplary cases selected to provide guidance to all judges and legal practitioners in China, the principle established by this ruling has been summarized as follows:

Where a party brings a lawsuit because the party suffers losses inside China as a result of an act of unfair competition outside China, the place in China whose market competition order has been adversely impacted by the alleged overseas act of unfair competition can be used as a connecting point [to establish] jurisdiction over the case.

With Article 40 included in the Anti-Unfair Competition Law 2025, Chinese courts will have a clear legal basis to support their jurisdiction over cases resembling the 2021 case discussed above.

More Legal Disputes Involving Foreign Parties

The extraterritorial reach of the Anti-Unfair Competition Law 2025 is expected to lead to more disputes involving foreign parties.

Since Article 40 authorizes overseas acts of unfair competition, as provided for in the Anti-Unfair Competition Law 2025, to be challenged in Chinese courts, so long as these acts “harm the legal rights and interests of domestic business operators or consumers”, parties in China may turn this provision and other provisions in the Anti-Unfair Competition Law 2025 into legal swords.

For example, Article 13 of the Anti-Unfair Competition Law 2025 prohibits businesses from using “data, algorithms, technologies […] etc. to, through influencing user choices or other means, carry out” broadly defined acts that “hinder or disrupt the normal operation of Internet products or services legally provided by other [businesses]”.  Since, in the current era of artificial intelligence, foreign companies often use data, algorithms, and technologies to influence user choices, will Article 13 open the door for lawsuits to be brought by Chinese companies claiming that such practices by foreign companies have hindered or disrupted the normal operation of Internet products or services legally provided by these Chinese companies?  China’s approach to this and similar issues will signal to the rest of the world whether the country can balance all rights and interests fairly.

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• The citation of this article is: The Editorial Board of SINOTALKS^®, China’s Newly Revised Law Combats Cross-Border Unfair Competition, SINOTALKS.COM^®, SinoExpress™, July 16, 2025, https://sinotalks.com/sinoexpress/cross-border-unfair-competition. ↩︎

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