China Issues Ecological and Environmental Code, Illegal Fines for New Chemical Substances Soar to Maximum of 2 Million Yuan

I. Legislative Milestone: Code Formally Approved

On March 12, 2026, the Fourth Session of the 14th National People's Congress formally approved the Ecological and Environmental Code of the People's Republic of China (hereinafter referred to as the Code), which was subsequently published in full by the Xinhua News Agency. This marks the second law in China named as a Code, signifying a historic improvement in the foundational and comprehensive legislative system in the ecological and environmental field.

The Code consists of five parts. Chapter Thirty-Four, under Part Two, Subpart Nine titled Risk Control of Chemical Substance Pollution, Prevention and Control of Electromagnetic Radiation and Light Pollution, specifically provides for the risk control system for chemical substance pollution. This marks the first time the new chemical substance environmental management registration system has been elevated to the level of a Code.

II. Core Provisions of the Code Regarding New Chemical Substances

• Establishment of the Registration System (Article 650)

The state implements an environmental management registration system for new chemical substances. Enterprises and institutions that manufacture or import new chemical substances must apply for environmental management registration for new chemical substances with the competent administrative department of ecology and environment of the State Council before manufacturing or importing them.

The Code establishes the principle of "registration first, then manufacturing/importing" in legal form, granting the highest legal effect to the new chemical substance registration system.

• Three Prohibitory Provisions (Article 651)

The Code explicitly stipulates three prohibitions:

• Prohibition on manufacturing or importing new chemical substances without a registration certificate;
• Prohibition on manufacturing or importing new chemical substances in violation of the certificate (not complying with the requirements of the registration certificate);
• Prohibition on using new chemical substances manufactured or imported by unregistered enterprises to produce products.

III. Penalty Provisions (Articles 1206 and 1207)

Analysis of Penalty Differences

In the legal responsibilities chapter (Articles 46 to 51) of the Ministry of Ecology and Environment Order No. 12 (implemented in 2021), the maximum fine was only 30,000 yuan, with the main penalties being fines coupled with joint disciplinary action for dishonesty and non-acceptance of registration applications.

The Code significantly increases the maximum fine to 2 million yuan and adds penalty types such as production restrictions, remediation shutdowns, certificate revocation, business suspension orders, and closures, forming a tiered disciplinary mechanism, effectively filling the previous systemic loophole of low cost for violations.

V. Compliance Recommendations

The Code will officially take effect on August 15, 2026, and related supporting regulations will also be revised accordingly. Relevant enterprises are advised to:

• Verify Registration Status——Assess whether existing new chemical substances have obtained valid registration certificates, and pay attention to changes in registration conditions;
• Establish Supplier Qualification Review Mechanism——Downstream enterprises must conduct due diligence on the registration qualifications of suppliers for purchased new chemical substances;
• Plan for New Product Registration in Advance——Integrate registration applications into the preliminary phase of new product R&D and import plans;
• Continuously Track Supporting Regulatory Revisions——The Regulation on Environmental Risk Management of Chemical Substances is being expedited, and Order No. 12 along with related administrative regulations are also expected to be revised in accordance with the Code.

If you need any assistance or have any questions, please get in touch with us via service@cirs-group.com.