Overview
Pursuant to the Administrative Regulations on Technology Import and Export (“Technology Regulation”), Technology Catalogue classifies technologies into three categories subject to different level of control: (i) technologies that can be freely exported from China; (ii) technologies that are restricted from export and require export licenses; and (iii) technologies prohibited from export. Generally speaking, technologies not listed in the Technology Catalogue can be exported freely, which only requires a record-filing of export agreements with MOFCOM, while exporting restricted technologies would require an export license of MOFCOM beforehand. The current Technology Catalogue contains 24 technologies prohibited from export and 111 restricted technologies subject to export licenses.
In this new Technology Catalogue, MOFCOM made some major changes on top of its most recent amendments in 2020, after which total covered entries reduced from 164 to 134, with 34 deleted1, four added2, and 37 revised3.
Key Sectors and Updates Highlights
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Life Sciences: The main change of the life science sector is the addition of “Cell Cloning and Gene Editing Technology for Humans” as a technology prohibited from export. The 2022 draft version intended to include additional several types of cloning and gene editing technologies that would be prohibited from export, such as Somatic Cell Cloning, Transcription Activator-like Effector Nuclease (TALEN) and Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR). However, MOFCOM has adopted industrial sector comments and decided to only retain in the final version subject to an export ban “gene editing technologies that are ethically controversial and may bring significant harm for the editing of human germ cells (i.e., embryonic cells, egg cells, sperm cells) that contain genetic material.”
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Automotive: The new Technology Catalogue added “LiDAR systems” as technologies subject to export license requirements. MOFCOM has narrowed down the control scope in the final version from its 2022 draft version by providing specific technical specifications to the original broad description “vehicle-mounted laser detection and ranging system technology.” The final version requires an export license for LiDAR system when it meets any of the specifications peak power (>30kW), pulse width (<1ns), detection range (>2km), angular accuracy (<40μrad), angular resolution (<20μrad), and ranging accuracy (<2mm).
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Energy: Comparing to the 2022 draft version which imposed controls on technologies that are used widely in the photovoltaic industry, such as “Large-Size Wafer Technology” and “Black Silicon Preparation Technology”, the final version did not include such technologies subject to export control and therefore has greatly eased the potential restrictions on outbound business developments of solar and related new energy areas. In comparison, MOFCOM updated the specifications for technologies related to rare earth extraction, processing and application in the new Catalogue.
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Drones: The 2023 revisions imposed more controls on drone-related technologies by adding control points “Key Technologies for Drone Payloads (manufacturing technologies for optoelectronics/infrared sensors, synthetic aperture radar and LiDaR)” and “Drone Flight Control System (autonomous navigation, path and obstacle avoidance planning and other related algorithms and software)” under entry “Technologies Related to Drones.” The trend is consistent with the controls that MOFCOM imposed earlier on certain dual-use drones and related equipment.
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Information Technology: The new Technology Catalogue further tailored and updated previous control on information technology industry. For instance, MOFCOM deleted control points that could be read overly-broad, such as “Information Access Encryption and Decryption Technologies.” MOFCOM also provided helpful illustrative control points for “Personalized Information Notification Services Technology Based on Data Analysis,” including personalized user preference learning technology based on continuous training and optimization of massive data, personalized user preference real-time perception technology, information content feature modeling technology, user preference and information content matching analysis technology, large-scale distributed real-time computing technology to support recommendation algorithms, etc. More importantly, MOFCOM restricted “Speech Synthesis Technology” and “Artificial Intelligence Interactive Interface Technology” for export control only when these technologies are applied “exclusively in Chinese and ethnic minority languages.”
How to Obtain an Export License for Restricted Technologies
Under current Chinese laws and Technology Regulation, a variety of cooperation patterns may constitute an export of technology, which may include the assignment of patent rights, IP rights, technical know-how and technology license or transfer. Where a restricted technology needs to be exported from China, then an exporter shall obtain an export license from MOFCOM before such export takes place. Generally, one shall go through the following steps to apply for an export license:
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Step 1: Obtain a Letter of Intent for Technology Export Licensing (“Export LOI”) from local MOFCOM authority for the potential export of restricted technology (“Transaction”).
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Step 2: Proceed to substantial negotiation and sign a technology export contract with counterparty/ies of the Transaction.
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Step 3: Apply for an export license from local MOFCOM authority for the Transaction within 3 years after the Export LOI is issued.
Implications
The newly updated Technology Catalogue reflected Chinese government’s continued efforts in making a comprehensive “export control toolkit.” After releasing the 2022 draft version for public comments, MOFCOM has spent a year examining industrial opinions, and “pulled back” some restrictions in its draft version that were overly-broad or generic. The 2023 revisions focus on restrictions of certain emerging or foundational technologies comparing to its previous versions, and largely eliminates controls on technologies that have been outdated or widely applied. For companies involved in the relevant sectors concerned in this updated version, it is imperative to implement effective internal compliance mechanism and understand whether and what technologies involved in the company’s business dealings would be subject to an export control under PRC law.
Authored by Roy Zou, Ben Kostrzewa, Stephanie Sun, Flora Feng, and Xiaoxian Wan.
Notes
1 Six technologies that used to be prohibited from export are deleted, including Metallurgy Technology of Non-Ferrous Metals; 28 restricted technologies that used to be subject to export licenses are deleted, including the Production of Photographic Materials, Medical Diagnostic Equipment and Device.
2 Cell Cloning and Gene Editing Technology for Humans is added as a technology prohibited from export; three technologies are added as restricted technologies subject to export licenses, including LiDAR Systems, Crop Hybridization Advantage Utilization, and Bulk Material Handling and Conveying.
3 Six revisions are made to technologies prohibited from export, including Computer Networks, Spacecraft Measurement and Control, Satellite Applications, and the Extraction, Processing, and Utilisation Of Rare Earth; 31 revisions are made to restricted technologies subject to export licenses, including Biotechnological Drug Production, Metallurgy Technology of Non-Ferrous Metals, 3D-Printing, Ship-Shape Design and Testing, Manufacturing of Core Hardware of the Computer, Drone, Design of the Large Power Equipment, Preparation and Processing of Tissue-Engineered Medical Devices Products, Communication Transmission, Information Processing, Computer Networking, General Software Development, Cryptographic Security.
