Notice from the State Tobacco Monopoly Administration on Implementing Policies for the E-cigarette Industry and Further Promoting Dynamic Balance Between Supply and Demand (Draft for Public Comment)

To thoroughly implement the State Council General Office's opinion on combating tobacco-related illegal activities across the entire supply chain, fulfill the requirements of restrictive industrial policies, curb the "involutionary" competition trend in the e-cigarette industry, and prevent and resolve the risk of overcapacity, the State Tobacco Monopoly Administration has drafted the "Notice on Implementing E-cigarette Industry Policies and Further Promoting Dynamic Balance of Supply and Demand (Draft for Public Comment)." Public comments are now being solicited; please submit your feedback by January 5, 2026.

Public feedback can be submitted via email to donghaoming@tobacco.gov.cn. Please indicate "Solicitation of Opinions on the Notice of the State Tobacco Monopoly Administration on Implementing Policies for the E-cigarette Industry and Further Promoting Dynamic Balance of Supply and Demand" in the email subject line.

Attachment: 1. Notice on Implementing Policies for the E-cigarette Industry to Further Promote Dynamic Balance Between Supply and Demand (Draft for Comments)

         2. Drafting Instructions

State Tobacco Monopoly Administration

December 25, 2025

Notice on Implementing Policies for the E-cigarette Industry and Further Promoting Dynamic Balance Between Supply and Demand

(Draft for public comment)

To all provincial tobacco monopoly bureaus:

To implement policies related to the e-cigarette industry, regulate the industry's operation, curb the "involutionary" competition trend in the e-cigarette industry, prevent and resolve the risk of overcapacity, and improve the compliance level of e-cigarette-related manufacturers, in accordance with the "Tobacco Monopoly Law of the People's Republic of China" and its implementing regulations, the "Opinions of the General Office of the State Council on Combating Illegal Tobacco-Related Activities Across the Entire Chain," the "Guidance Catalogue for Industrial Structure Adjustment (2024 Edition)," the "E-cigarette Management Measures," and the "Several Policy Measures (Trial) on Promoting the Legalization and Standardization of the E-cigarette Industry," the following notice is hereby issued regarding further promoting the dynamic balance of supply and demand in the e-cigarette industry (including e-cigarette products and atomized substances, and nicotine for e-cigarettes, hereinafter the same):

I. Regulate the investment behavior of e-cigarette-related manufacturers. Strictly implement the restrictive industrial policies for e-cigarettes, prohibiting investment in new projects, and ensuring that relocation and restoration projects do not increase production capacity. On-site technological upgrades (including the purchase of production equipment) generally should not increase production capacity. If an increase in production capacity is necessary, it must comply with e-cigarette industry policies, regulatory policies, and capacity management regulations, possess genuine market demand, and have safety, hygiene, and environmental protection facilities, equipment, and technical conditions配套 with production and operation. It must also conform to the trends of intelligentization, high-end development, and greening, and strictly follow the procedures required by the "Detailed Rules for the Management of Fixed Asset Investment in E-cigarettes." Enterprises primarily engaged in export sales must prove that the products produced by the increased production capacity comply with the laws, regulations, and regulatory rules of the destination country or region. E-cigarette-related manufacturers are prohibited from illegally increasing the number or capacity of production lines or adding component production lines, and are prohibited from outsourcing major production processes to unlicensed enterprises. They are also prohibited from expanding production capacity in disguise or circumventing fixed asset investment approvals.

II. Strengthen the Regulation of E-cigarette Production Capacity. Adhere to market demand-oriented supply-side structural reform of the e-cigarette industry, taking into account enterprise equipment levels, operating conditions, and industry trends. Implement approved e-cigarette production capacity management according to the principles of "fairness, openness, categorized policies, and steady and orderly progress." In principle, approved e-cigarette production capacity should remain basically stable. E-cigarette manufacturers should operate within the approved capacity, and exceeding the approved capacity is strictly prohibited. Any adjustments require application for re-approval of production capacity and completion of licensing procedures. Allow legally compliant e-cigarette manufacturers that comply with industrial and regulatory policies to integrate and reorganize their production capacity through methods such as merging production sites, thereby improving enterprise management efficiency and capacity utilization.

III. Promoting a Balance Between Supply and Demand in the E-cigarette Market. By coordinating an effective market and a proactive government, annual production scales will be determined within the approved production capacity, serving as annual production and sales targets for enterprises. The needs of e-cigarette manufacturers to adjust their production scale should be reasonably met based on market order conditions and other factors, effectively preventing and mitigating the risks of disorderly market competition. Strict control over total production scale will be implemented, adhering to differentiated policies and rigorously reviewing adjustments to production scale. For enterprises located in areas with a strong e-cigarette industry base and a relatively concentrated number of enterprises, the integration of production sites and residences into the same location will be permitted. The supervision of e-cigarettes will be continuously strengthened, with strict restrictions and key inspections and controls imposed on high-risk market entities. Illegal and irregular activities such as export repatriation, false customs declarations, and products failing to meet quality and safety requirements will be severely punished according to law. E-cigarette manufacturers should fulfill their primary responsibilities, strengthen compliance construction, and ensure compliance at all stages of the export trade chain.

IV. Preventing and Resolving the Risk of Excess E-cigarette Production Capacity. Adhere to the principles of rule of law and marketization, and ensure a smooth capacity exit mechanism. Strictly enforce relevant laws and regulations, e-cigarette industry policies, and mandatory standards. Eliminate the corresponding production capacity of enterprises that do not comply with industry policies, whose product quality, hygiene conditions, safety production, fire protection, environmental protection, and energy consumption fail to meet relevant national standards, or that produce and sell substandard products, in accordance with laws and regulations. For enterprises with consistently low capacity utilization rates or those involved in illegal, irregular, or dishonest behavior, include them in the key supervision scope, gradually eliminate outdated production lines, and reduce corresponding production capacity. Improve the e-cigarette standard system, covering technical standards, substance limits, production processes, inspection and testing, quality and safety, and hygiene conditions. Strengthen accreditation and certification and inspection and testing capabilities, and continuously optimize the production capacity structure through measures such as revising technical standards and licensing conditions. Heated cigarette device production lines and approved production capacity should be strictly distinguished from e-cigarette production lines; they must not be used interchangeably or counted repeatedly.

V. Enhance the Compliance of E-cigarette Manufacturers. E-cigarette manufacturers should improve their professional and standardized operating capabilities, strengthen technological research and development and brand cultivation, continuously optimize processes and technologies, and consolidate and expand the core competitiveness of China's e-cigarette industry. Improve the digitalization of e-cigarette regulation, refine the traceability management system, and formulate supporting guidelines for e-cigarette supply and demand management and fixed asset investment management. Strengthen monitoring and early warning of enterprises' fixed asset investment, approved production capacity, and production scale usage to continuously improve regulatory effectiveness. Promote the construction of an e-cigarette credit regulatory system, implement differentiated regulatory measures, and gradually simplify verification materials and procedures and reduce the frequency of on-site inspections for compliant and creditworthy e-cigarette manufacturers.

Violations of this notice constitute non-compliance with the licensing conditions stipulated in Article 13 of the "Detailed Rules for the Administration of Tobacco Monopoly Licenses for E-cigarette-Related Production and Wholesale Enterprises," which requires compliance with national e-cigarette industry policies. The violations will be handled according to the severity of the offense and in accordance with relevant e-cigarette industry and regulatory policies. Where heated cigarettes are subject to other relevant industry policies, those policies shall prevail.

State Tobacco Monopoly Administration        

December 25, 2025        

Drafting instructions

To thoroughly implement the State Council General Office's opinion on combating tobacco-related illegal activities across the entire supply chain, fulfill the requirements of restrictive industrial policies, further regulate the operation of the e-cigarette industry, curb the trend of "involutionary" competition in the e-cigarette sector, prevent and resolve the risk of overcapacity, and improve the compliance level of e-cigarette-related manufacturers, the State Tobacco Monopoly Administration (hereinafter referred to as "the Administration") has drafted the "Notice on Implementing E-cigarette Industry Policies and Further Promoting Dynamic Balance of Supply and Demand (Draft for Comments)" (hereinafter referred to as the "Notice"). The relevant information is explained as follows:

I. Background of Drafting

Since the State Council amended regulations in 2021, clarifying that e-cigarettes should be governed by the same regulations as cigarettes, our bureau has established and improved a "1+2+N" e-cigarette regulatory policy system, achieving significant results in implementing national tobacco control requirements, preventing disorderly industry development, protecting public health and safety, and promoting a standardized and orderly market. However, problems still exist, such as the slow exit of outdated production capacity, structural imbalances in product supply and demand, and frequent violations in exports. In December 2025, the General Office of the State Council issued the "Opinions on Combating Illegal Tobacco Activities Across the Entire Chain," requiring strict implementation of e-cigarette industry policies and comprehensive strengthening of e-cigarette regulation. To deepen the legal and standardized governance of e-cigarettes, implement the requirements of restrictive e-cigarette industry policies, and further leverage the important role of fixed asset investment approval and supply and demand regulation in promoting supply and demand balance and facilitating the exit of outdated production capacity, our bureau, based on a systematic review and summary of experience, in-depth investigation and research, and extensive consultation, drafted the "Notice."

II. Main Content

The "Notice" is a detailed implementation of the restrictive industry requirements in the "Guidance Catalogue for Industrial Structure Adjustment (2024 Edition)" and an important supplement to the "Several Policy Measures (Trial) for Promoting the Legalization and Standardization of the E-cigarette Industry," based on the current regulatory situation and industry trends. The "Notice" comprises five parts: First, it regulates the investment behavior of e-cigarette-related production enterprises, clarifying investment policy requirements for new construction, on-site technological upgrading, relocation, and reconstruction projects; second, it strengthens the regulation of e-cigarette production capacity, clarifying requirements for approved capacity management and capacity integration and restructuring; third, it promotes supply and demand balance in the e-cigarette market, clarifying requirements for production scale verification and adjustment; fourth, it prevents and resolves the risk of excess e-cigarette production capacity, clarifying measures to promote the exit of outdated and excess capacity; and fifth, it improves the compliance level of e-cigarette-related production enterprises and promotes the digitalization and facilitation of e-cigarette regulation.