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China added 23 cutting-edge technologies to a list of restricted exports items, according to a government circular posted on Friday night. The revision, initially revealed when China-US tensions erupted, strengthens the regulatory foundation for possible export controls regarding countries and regions taking a hostile stance against China, said a trade expert.

Technologies now face tighter export controls, in areas such as vegetation breeding, metal 3D printing and advanced drilling tools and software used in oil and gas extraction, according to a new catalogue issued by China's Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology.

The new catalog is aimed at better regulation of such exports, boosting scientific advancement and international economic and technological cooperation and safeguarding national economic safety, an official with MOFCOM's Department of Trade in Services and Commercial Services said in a late Friday statement.

Technology exports refer to China's transfer of technologies including the transfer of patent rights and technology secrets to overseas markets though trade, investment or economic and technological cooperation.

The nation categorizes tech exports into free, restricted and prohibited exports. Free tech exports are subject to contractual registration afterward, while the export of restricted technologies requires a license.

The ministry noted that It has been more than 10 years since the last revision and China's steadily improving science and technology level has made a timely update necessary. 

The original list of items for which exports are prohibited came into effect on November 1, 2008. It was not until July 2018 that MOFCOM unveiled draft revisions to the catalogue for control of both imports and exports. 

A statement from MOFCOM showed the ministry was seeking public comments on the revisions through August 22, 2018. 

In 2013, China's technology exports were worth $20 billion, less than half that of technology imports. In 2019, technology exports by China reached $32.1 billion, almost equal the value of technology imports, data from the ministry showed.  

China US

It could be said that the flare-up in trade tensions between China and the US in 2018 motivated the government to revise the catalogue, Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing who closely follows the China-US trade frictions, told the Global Times on Friday. 

The restricted export items comprise mostly China's indigenous intellectual properties that could only come to fruition in China where its unique institutional advantages ensure hefty commitments to technologies that would be unavailable in other economies, he said.       

Cutting-edge technologies used in third- and fourth-generation nuclear equipment and materials, sea-borne satellite launching pads, and engineering equipment and machinery used in building manmade islands in deep water were also included. 

Technologies in which Chinese products have an edge, such as drone technology, ultra-high voltage transmission and clean coal power generation, were also among the added items.

Sensitive technologies including quantum encryption and early warning technology based on massive data harvesting were also listed.    

Exporters of these technologies will have to obtain a permit for technology transfers overseas, either via trade or investment.

The revised catalog could be comparable to the US Entity List in that it offers a regulatory basis for restrictions on business deemed detrimental to China's interests, according to Gao. 

Whether a ban or restriction would be activated or not is left to China's discretion, meaning that markets where a China threat is being hyped could be subject to the restrictions, he reckoned. 

While the impact of the revised catalog on Chinese exports is hard to predict for the time being, the resulting increased intellectual property protection is likely to boost exports of key items on the list, as overseas buyers may only secure the items from the Chinese market, Gao added.

Also announced on the same day were nine items that were previously banned or restricted and that will now have loosened export controls.

Global Times