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US Adds Chinese Firms to Xinjiang Forced Labor Entity List: What Foreign Founders Operating in China Need to Know

China's Ministry of Commerce responds to new US sanctions on Chinese entities, including biotech firms, warning of countermeasures. Foreign founders in China should monitor regulatory risks and ensure compliance.

US Expands Entity List Under Uyghur Forced Labor Prevention Act

On October 28 (US Eastern Time), the US Department of Homeland Security announced the addition of three Chinese entities to the entity list under the Uyghur Forced Labor Prevention Act. This move is part of a broader pattern of US actions targeting Chinese businesses under the pretext of human rights concerns.

China's Ministry of Commerce (MOFCOM) spokesperson responded to a reporter's question on October 29, 2026, strongly condemning the US decision and rejecting its factual basis. For foreign founders registering or operating a company in China, this development underscores the importance of staying informed about regulatory and geopolitical risks that may affect business operations.

China's Official Position on Forced Labor Allegations

The MOFCOM spokesperson stated that forced labor does not exist in China. According to the source, all ethnic groups in Xinjiang enjoy freedom and equality in employment, and their labor rights are effectively protected by law. The US measures are described as lacking any factual basis and as part of a continued manipulation of human rights issues to advance unilateral protectionism and bullying practices. China strongly condemns and firmly opposes these actions.

Foreign founders should note that official Chinese statements consistently deny allegations of forced labor and emphasize legal protections for workers. While this article does not assess the veracity of these claims, it is important to recognize the official stance as context for understanding China's policy responses.

Recent US Sanctions and China's Countermeasures

The spokesperson 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 has taken firm countermeasures. Despite China's opposition, the US has continued to impose new sanctions, including adding Chinese biotech companies to the list. This listing practice is said to deviate from the consensus reached by the two heads of state, seriously undermine the stability of China-US economic and trade relations, and contravene humanitarian principles.

China has urged the US to immediately stop political manipulation and smear campaigns, and to cease unreasonable suppression of Chinese enterprises. China will take necessary measures to firmly safeguard its interests.

Implications for Foreign Founders Operating in China

For foreign entrepreneurs establishing or running a company in China, these developments highlight several practical considerations:

• Regulatory vigilance: Stay updated on both Chinese and US regulatory changes that could affect your business, especially if you operate in sectors like biotech, technology, or supply chains linked to Xinjiang.
• Compliance with Chinese law: Ensure your company adheres to all local labor, employment, and human rights regulations. China maintains that its labor laws protect workers' rights; foreign employers should familiarize themselves with these requirements.
• Supply chain due diligence: If your business sources materials or products from Xinjiang or involves Chinese entities that may be subject to US sanctions, conduct thorough due diligence to mitigate risks of inadvertent violations of US or other foreign laws.
• Monitoring bilateral tensions: The US-China economic relationship remains volatile. Changes in sanctions lists can impact market access, financing, and partnerships. Build contingency plans for potential disruptions.
• Engage local expertise: Consult with legal and business advisors in China to navigate the complex regulatory environment and understand how geopolitical developments may affect your operations.

While the Chinese government reiterates its commitment to protecting the rights of all workers and opposes what it views as unfair US sanctions, foreign founders should take a balanced approach, ensuring compliance with both Chinese regulations and applicable international laws.

China's Response and Future Actions

The MOFCOM spokesperson emphasized that China will take necessary measures to safeguard its interests. This suggests that further countermeasures may be forthcoming, which could affect foreign businesses operating in China. Founders should monitor official announcements and maintain flexibility in their strategies.

It is also important to note that the US actions are described by China as violating the consensus reached by the two heads of state, which could strain bilateral relations and create uncertainty for cross-border trade and investment. Foreign founders should factor this into their risk assessments.

Practical Steps for Foreign Founders

Given the evolving situation, foreign founders should consider the following steps to protect their China operations:

• Review your entity structure: Ensure your Chinese entity (e.g., wholly foreign-owned enterprise, joint venture) is properly registered and compliant with all reporting requirements.
• Audit labor practices: Verify that your employment contracts, working hours, wages, and workplace conditions comply with Chinese labor law. Document your compliance efforts.
• Assess sanctions exposure: If you have US connections (investors, customers, suppliers), evaluate whether your Chinese partners or supply chains could be impacted by US entity lists. Seek legal advice if uncertain.
• Stay informed: Follow official Chinese government channels (e.g., MOFCOM, State Council) and reputable news sources for updates on regulatory changes.
• Engage with industry groups: Join foreign chambers of commerce or business associations in China to share information and best practices.

By staying proactive and informed, foreign founders can better navigate the complexities of the current business environment in China.

Conclusion

The US addition of Chinese entities to the Xinjiang forced labor entity list is a reminder of the geopolitical risks that can affect businesses operating in China. While China strongly opposes these measures and asserts that its labor practices are lawful and ethical, foreign founders should remain vigilant and ensure compliance with all applicable regulations. By doing so, they can protect their investments and contribute to a stable business environment.

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 registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.