Key Points
● China’s State Council General Office on December 18 issued a high-level enforcement directive, calling for a full-chain crackdown on illicit tobacco-related activities across production, logistics, distribution, retail and cross-border trade.
● E-cigarettes and nicotine pouches are explicitly brought under enforcement, with the document banning the unlicensed production and sale of nicotine-containing oral products.
● Illegal e-cigarette “export reflow” is singled out as a key target, reinforcing enforcement following China’s 2022 move to place e-cigarettes under the tobacco monopoly system and restrict domestic sales at the product standard level.
● The directive strengthens coordination between administrative enforcement and criminal justice authorities, and calls for cross-agency action involving customs, public security and market regulators.
● Tobacco remains a major source of fiscal revenue, with the industry generating about 1.54 trillion yuan in 2024, roughly 7% of China’s general public budget revenue.
2Firsts, December 18, 2025, Shenzhen-China’s State Council General Office on December 18 at 5:00 p.m. Beijing time issued an opinion calling for a comprehensive, full-chain crackdown on illicit tobacco-related activities, setting out enforcement requirements covering traditional tobacco, e-cigarettes and nicotine-containing oral products.
According to a report released by Xinhua News Agency on December 18, the document — titled Opinion on Cracking Down on Tobacco-Related Illegal Activities Across the Entire Chain — addresses long-standing issues including counterfeit production, illegal sales and smuggling. It calls for strengthened law enforcement across the entire supply chain, from manufacturing and warehousing to logistics, distribution, retail and cross-border trade, with the stated aim of purifying the tobacco market and safeguarding state interests and consumer rights.
State Council General Office Elevates Enforcement Deployment
The opinion was issued by the State Council General Office, a higher administrative level than most previous tobacco-related enforcement notices, which have more commonly been released by the State Tobacco Monopoly Administration or local authorities.
The document calls on local governments and relevant departments to fully assume their enforcement responsibilities, strengthen inter-agency coordination, and ensure that enforcement measures are implemented across all stages of the supply chain. It also calls for improving the vertical management of the tobacco regulatory system and strengthening mechanisms for entrusted enforcement between departments.
Nicotine Pouches Explicitly Named in State Council-Level Document
For the first time in a document issued by the State Council General Office, the opinion explicitly states that the unlicensed production and sale of oral tobacco products, nicotine pouches and nicotine gels containing tobacco or nicotine substances are prohibited.
The document also calls for strict enforcement against the illegal manufacture and sale of products that resemble cigarettes in appearance, usage or primary function — including empty cigarette tubes, herbal or tea-based smoking products — as well as simplified cigarette-making machinery.
China’s existing e-cigarette manufacturing licenses do not cover nicotine pouch products, and the opinion does not specify a licensing pathway. The document explicitly places nicotine pouches and other nicotine-containing oral products within the scope of tobacco-related enforcement.
E-Cigarette Enforcement Targets “Export Reflow”
The opinion also reiterates enforcement against illegal e-cigarette activities, including so-called “export reflow,” in which products declared for export re-enter the domestic market through illicit channels.
Prior to 2022, China did not prohibit flavored e-cigarettes, and fruit-flavored products expanded rapidly in the domestic market, contributing to the widespread adoption of e-cigarettes among consumers. In 2022, China brought e-cigarettes under the tobacco monopoly system. At the product standard level, only 101 additives were permitted, a framework that, in practice, prevents fruit-flavored e-cigarettes from being sold domestically.
Chinese regulators have previously said that illegally re-imported flavored e-cigarettes raise concerns related to product safety, ingredient compliance and tax losses. The opinion calls for stricter supervision of e-cigarette production, storage, logistics, transportation, distribution and online sales, as well as tougher enforcement against illegal manufacturing, wholesale and retail activities.
Criminal Justice Linkages and Cross-Agency Coordination
Beyond specific product categories, the opinion emphasizes the need to strengthen coordination between tobacco administrative enforcement and criminal justice authorities, and to accelerate the professionalization and standardization of enforcement teams.
It also highlights enhanced cooperation among customs, public security, market regulators and postal authorities, particularly in targeting smuggling conducted via maritime routes, land borders, ports of entry, international mail and cross-border e-commerce logistics.
Background: Premier-Led Meeting Preceded Policy Issuance
The issuance of the opinion follows earlier instructions delivered at the highest level of government.
According to Xinhua News Agency and China Media Group’s Xinwen Lianbo, Premier Li Qiang on December 5 chaired a State Council executive meeting that called for a comprehensive, full-chain crackdown on illicit tobacco activities. The meeting stressed stronger supervision and law enforcement across tobacco production, warehousing, logistics, circulation and retail, and emphasized safeguarding state interests and consumer rights. No detailed operational measures were disclosed at the time.
The release of the State Council General Office opinion provides a formal enforcement basis for implementing the priorities outlined at that meeting.
Tobacco Remains a Key Source of Fiscal Revenue
Public data show that tobacco remains a major contributor to China’s public finances. In 2024, the tobacco industry generated approximately 1.54 trillion yuan ($215 billion) in fiscal revenue, up 2.8% year on year. Over the same period, China’s general public budget revenue totaled about 21.97 trillion yuan, up 1.3%.
Based on these figures, tobacco-related revenue accounted for roughly 7% of China’s general public budget revenue in 2024.
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