I. Revisions Proposed

According to the Circular, 32 entries are deleted from the Catalogue, with 36 amended and 7 added. As a result, the Catalogue controls 139 entries, including 24 prohibitive and 115 restrictive for export purposes.

Most of the technological entries deleted in this revision belong to traditional industries such as agriculture, food, textile, chemical, and equipment manufacturing industries. Few entries proposed for deletion are from high-tech industries. Except for the “applied technology for engineering machinery,” the deleted entries are all from the Catalogue updated in 2008 and almost all entries newly added in the 2020 revision are retained this time. The entries as added in this proposed revision fall into crucial and emerging industries such as biological research, rare earth, photovoltaics, smart cars and so forth, reflecting the considerations of protection of national security and social public interests. The entries amended this time are across various industries. Except for reduction of a few control points, most amendments are made in terms of adding control points or refining control points by illustrations or adding descriptions or parameters. The trend is to focus on controls on high-tech and emerging technologies.

For details of the proposed revisions, please see Exhibit A.

II. Basics of Technology Export Controls

1. Definition of technology export

“Technology Export” is defined as cross-border transfer from China either by means of trade, investment or commercial cooperation. Such technology export includes assignment of patent or patent application, patent licensing, assignment of technical know-how, technical service and so forth. Such technology export is regulated by the Administrative Regulations of the People’s Republic of China on Technology Import and Export (the “Tech Import and Export Regulations”).

2. Regulatory scheme for technology export

Under the Tech Import and Export Regulations, the technology export controls manifest themselves in three patterns: (a) technologies free from export control, only filing with the commerce authority of the executed contract for such export; (b) technologies restrictive from export, which needs an export license issued by the commerce authority before export; and (c) technologies prohibitive from export.

III. Relevance of Tech Export Control to Export Control Law

Though the licensing system under the Tech Import and Export Regulations and Catalogue is different from export control of dual use items, nuclear and military items, the exporter in China must be aware that violation of the Tech Import and Export Regulations may result in violation of the Export Control Law, if the reason for control of the technologies transferred illegally is national security or interests, or if such export endangers the national security of China, so that the severe penalties under Export Control Law may be imported on such exporter in violation.

IV. Due Diligence Consideration

For any foreign trade, investment or commercial transaction projects, if there is an element of cross-border transfer of technologies from China, the legal and trade compliance due diligence is a must before conclusion of the transactions in the projects.