The rule applies to publications in Chinese, such as newspaper, books, DVDs, Journals. So you will still find "fried enema" on the menu unless that menu has an ISBN bar code on its back.
It is designed to limit (1) the use of mixture of Chinese and English use (creative translation included), as well as (2) English abbreviations such as CPI--and instead use its Chinese counterpart. So the (1) is more like separation of two languages, I guess, similar to l'Académie Française. (2), however, doesn't make much sense, because English abbreviations are more efficient and economical in expressing, particularly, technical terms. Their Chinese counterparts are less known, less used, but lengthier.
It could further apply to, however, Chinese netizens' neologisms coined to circumvent censorship on sensitive key words. But the evolution of language cannot be legislated, however hard one government tries.

Good points made by Netheo.

I have been noticing a lot of English/Chinglish use in order to circumvent censorship (outright use of the English word 'government' on some BBSs, for example, sometimes hyphenated or with spaces as additional protection from the censors). I suppose the government could attempt to block input of non-hanzi characters on some websites, citing this law, but I suspect it's not going to be that easy to block English (and Chinglish) from many non-governmental mediums such as social networks.

Furthermore, I wonder if this is just one small step towards making Chinese a dead language, incapable of innovating or renovating itself. It does make me glad that there is no such ban on allowing outside words to enrich the world's lingua-franca, English--including with Chinglish phrases such as "long time no see" or "chop chop"!

One last thought: will China soon be attempting to popularize acronyms based on pinyin transliterations of its own language? GCD (Gongchan Dang), for example, instead of CCP (Chinese Communist Party)? Or are any acronyms (by necessity Romanized) verboten?

This decree, like many, probably won't have too much of an actual impact. Isn't it a bit more efficient to say "WMD" than "da gui mo sha shang wu qi"? Pretty much every Chinese person I've ever needed to contact tells me "fa gei wo email" instead of "dianyou", itself an abbreviated form of "dianzi youjian". Netheo's final paragraph sums up the whole scenario pretty succinctly. There are websites which introduce several new words to the Chinese lexicon literally on a daily basis, and their momentum will not be slowed by a ruling from above

I saw a sign in China, "Please slip and fall carefully." During a tour along a narrow road into the China countryside I saw a sign warning of what I soon discovered to be an 'S' curve, "Accident Ahead." When later I continued to a beach on the South China Sea I read a huge sign that blared, "Please Leave The Beach Where You Found It." (But alas, after a while war stories wear thin.)

I hope that by the end of the present century China can correct this Chinglish. However, as Ye Olde English Teacher (in modern terms, one who teaches in two or more countries so thus is an internationl educator), I necessarily must be less than optimistic. I indeed find the Chinese reaction to their Chin-glish (certainly not Chi -nglish) to be odd to say the least. In other countries where I had the pleasure to teach English, the locals were ashamed to hear that they speak Japlish, or Korlish, or Thailish. But the reactions of the Chinese to their discovery of being advised they speak Chinglish is one of pride, self congratulation, as if they had actually created (a mangled language mutation that is) uniquely Chinese. Indeed the Chinese have begun to do this, which is the awful point the Chinese wholly miss that others completely get.

As to pretentiousness, i.e., some kind of -- are you ready for this -- Le Dicktat Academie Chine in CCP controlled China, it is a far more hopeless cause than L'Academie francaise in Paris ever has been or would continue to be. The Chinese in their huge and ancient country have many Chinese language dialects -- some Chinese philologists as well as others globally estimate as many as 100 dialects -- which makes the Beijing (empty diktat) to all of China to learn Mandarin as the overriding common language a greater priority than the learning of English. I say, a far greater priority for of course political reasons directly related to the self interest and self survival of Pyongyang.

So I would say the newest CCP diktat from the Politboro in Beijing concerning the use of English constitutes much ado about nothing. Among the youngest Chinese the CCP in Beijing is the enemy in this and in much else, from the economic to the ethical to the nature of one's character. Very many of the up and coming internet generations of Chinese just don't listen to the CCP. Moreover, they have great contempt of the CCP in Beijing in all things considered. The Mandarin sounds for CPI are several; the Cantonese dialect has six sounds for CPI; the 100 other local dialects of mainland China have several or more sounds for CPI. Any Chinese I knew or continue to know state simply, comfortable and easily 'CPI.'

I want to see the same sort of declaration by U.S. citizens and lawmakers. Only English must be spoken in the United States and anything written in any other language must also be written in English. English is made up of words from a multitude of languages and dialects as well as colloquialisms and slang that make our language so colorful and diverse.

I don't want English, the language of the people of America, so long in development to the stage where it is today, to be lost in political squabbling and the mad desire by the ACLU and others to give the minority what they want at the expense of the majority. Seems that our democracy has trickled into the cracks somewhere.

Time to turn things around and bring back majority rule. If the minority wants something they must convince the majority that the subject of their desires is good for us all, then, they will get what they want. Sound like the way things should be? Does to me.

China is fighting a losing generational war with it's younger population. The Chinese government's attempts to limit the draw of Western influences is futile. Probably because so many Chinese are being exposed to the West by working in factories creating the IPods, Designer jeans, DVD Movies, laptops, etc.

This reminds me of how the former U.S.S.R. tried to ban blue jeans during the 1980's. All it did was piss off the youth and made a pair of Levi's worth 100 bucks in E.Germany. They would be better off spending that money and energy on finding out why so many older Chinese men are invading grade schools and killing children on stabbing rampages.

Chingrish will never die! So many legendary examples: "Keep off the River;" "No Conversation, No Saliva;" "No Load Speaking;" "If You are Lost, Call the Police At Once;" and "Execution in Progress." This is a wonderful art form, and an endless source of amusement in a place in dire need of more humor. Support Chinglish! Do Not Pass GO, Click http://chinareallysucks.com/Site/Chinglish.html

The "first visit" notice on the inside hotel room door in Beijing is almost perfect English - but then almost only counts in hand grenades and horseshoes. Then there's the Chinglish created by the more sophisticated Chinese, i.e., the increasing number who are young and who know English well enuff to apply it to everyday life in the CCP-RPC by blending the English language and CCP-PRC society and culture.

I cite some of the more sophisticated Chinglish among the educated elites who can articulate their rejection of the CCP.

*** Harmany: (harm + many) a sophisticated blend of two English words into one consciously created Chinglish word that is a sarcastic comment critical of the CCP self serving obsession with harmony among the Chinese. That is, the CCP harms many Chinese people.

*** Amerrya: (America + merry) another clever Chinglish mixing of two English language words to express the longing view of the contemporary generation of the Chinese to have (1) a happy country where one can enjoy life and (2) a life lived in Heaven (if a godless Chinese one, but a paradise none the less).

*** Suihide: (suicide + hide) to state that political prisoners in the CCP-PRC not so mysteriously die while imprisoned; equivalent to the English expression (stated so well by Capt Reneault - Claude Reins - in the 1944 Best Picture Academy Award winning film "Casablanca") that "we're still trying to decide whether the prisoner hanged himself in his cell or was shot while trying to escape."

*** Canclensor: (cancel + censor) the CCP punishing policy of censoring and blacking out anything and everything stated by its citizenry that it doesn't like, that it prohibits, that it doesn't approve .

*** Smilence: (smile + silence) bearing through as best as possible the CCP's known corruption and self serving statements and policies while fully well knowing the CCP cares only for itself and to enrich itself.

*** Antizen (ant + citizen) the annual circumstance of the many college graduates who are unable to find a suitable job so must accept a low status job of low pay and must, consequently, live in a tiny one or two room apartment with several other antizens, all of whom must work at their jobs as ants labor among the many ants in an ant colony.

So, yes, there is a pathetic Chinglish of gross mistakes of English and there is another world of creative and innovative Chinglish devised by intelligent and insightful Chinese and which tells us much about the critical awareness and suffering of young Chinese sophisticates in the CCP-PRC that they cannot stand.