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US Adds Chinese Firms to Xinjiang-Linked Entity List: What Foreign Founders in China Need to Know

The US Department of Homeland Security added three more Chinese entities to the Uyghur Forced Labor Prevention Act entity list on October 28. China's Ministry of Commerce strongly condemned the move. Here's what foreign founders operating in China should understand about the latest US-China trade tensions.

US Expands Xinjiang-Linked Entity List

On October 28, the US Department of Homeland Security announced the addition of three Chinese entities to the entity list under the so-called Uyghur Forced Labor Prevention Act. This development was confirmed by China's Ministry of Commerce (MOFCOM) spokesperson during a press conference on October 29, 2026.

For foreign founders registering or operating a company in China, this latest action underscores the importance of staying informed about evolving US-China trade measures that could affect supply chains, partnerships, and market access.

China's Response

The MOFCOM spokesperson stated that China has noted the situation and firmly opposes the US action. According to the spokesperson, forced labor does not exist in China, and all ethnic groups in Xinjiang enjoy free and equal employment rights, with their labor rights effectively protected by law. The US measures are described as having no factual basis, and the US is accused of using human rights as a pretext for unilateral protectionism and bullying. China strongly condemns and resolutely opposes these measures.

The spokesperson also noted that the US had recently added a large number of Chinese entities to the so-called Xinjiang-related entity list. China has made solemn representations to the US and taken firm countermeasures. However, the US has continued to impose new sanctions, including adding Chinese biopharmaceutical technology companies to the list. This listing practice is said to deviate from the consensus reached by the two heads of state, seriously undermining the stability of China-US economic and trade relations, and violating humanitarian spirit. The US is urged to immediately stop political manipulation and smear attacks, and cease unreasonable suppression of Chinese enterprises. China will take necessary measures to firmly safeguard its interests.

Implications for Foreign Founders

For foreign entrepreneurs setting up a company in China, the US entity list designations can have indirect effects. While the MOFCOM statement focuses on the US actions and China's response, founders should be aware that supply chain due diligence is increasingly critical. US Customs may detain goods suspected of being produced with forced labor, and companies sourcing from affected regions or entities may face heightened scrutiny.

It is essential to conduct thorough due diligence on suppliers and business partners to ensure compliance with both US and Chinese regulations. This includes understanding the origins of raw materials and the labor practices of suppliers, especially if your business involves textiles, agriculture, or other sectors that have been targeted by US import bans.

Additionally, the inclusion of biopharmaceutical technology companies in the latest round of listings signals that the scope of US measures may extend beyond traditional labor-intensive industries. Founders in tech and healthcare sectors should monitor developments closely.

Navigating US-China Trade Tensions

The MOFCOM statement reflects ongoing tensions between the world's two largest economies. For foreign founders, this environment requires a balanced approach. On one hand, China remains a crucial market and manufacturing hub; on the other, US regulations can affect your ability to export or raise capital from US investors.

Staying informed about official announcements from both sides is vital. The MOFCOM website and US Federal Register are key sources. Building a compliance strategy that accounts for both jurisdictions can help mitigate risks. This may include diversifying supply chains, maintaining transparent records, and engaging local legal counsel.

China's commitment to protecting the rights of all workers and ensuring a stable business environment for foreign enterprises remains clear. The MOFCOM spokesperson reiterated that China will take necessary measures to safeguard its interests, which could include countermeasures affecting US entities. Founders should be prepared for potential shifts in the regulatory landscape.

Practical Steps for Foreign Founders

• Conduct Supply Chain Due Diligence: Map your supply chain to identify any connection to entities or regions affected by US restrictions. This is especially important for products destined for the US market.
• Monitor Official Announcements: Regularly check updates from MOFCOM and US agencies such as the Department of Homeland Security and the Treasury Department's Office of Foreign Assets Control (OFAC).
• Engage Local Expertise: Work with Chinese legal and compliance advisors who understand both local regulations and international trade rules.
• Maintain Clear Documentation: Keep detailed records of your sourcing, labor practices, and compliance efforts. This can be crucial if your goods are subject to US customs scrutiny.
• Diversify Markets and Suppliers: Reducing reliance on any single market or supplier can help buffer against geopolitical shocks.

Foreign founders should also note that China continues to welcome foreign investment and is committed to improving its business environment. The MOFCOM statement, while strongly worded, is part of diplomatic exchanges and does not indicate a change in China's policies toward foreign enterprises. However, the escalating tit-for-tat measures between the US and China could create uncertainty.

Conclusion

The US addition of Chinese entities to the Xinjiang-related entity list is a reminder that geopolitical factors can impact business operations. For foreign founders in China, proactive compliance and awareness are key to navigating these challenges. By staying informed and seeking professional advice, you can protect your business interests while continuing to leverage China's market opportunities.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with company registration and operation in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.