China imposes new controls on technology exports

China has passed a new law restricting exports of sensitive products or technologies, in Beijing's latest move to strengthen national security amid an increasingly volatile international trade environment.

The export control law covers military, nuclear and other goods, as well as technologies, services and other "controlled items" related to safeguarding national security. The law was approved by the national people's congress yesterday and will take effect on 1 December.

Details of the products covered by the law are unclear. China's national export control management department will draw up a list of controlled items and publish it in a timely manner, the law said. Export destinations for controlled items will be assessed by "risk level", hinting at targeted restrictions on shipments.

The law's focus on controlling exports of military and technological items raises the prospect that it could affect products such as rare earths and other metals used in sensitive technology applications, either in themselves or through finished/semi-finished products. China is the world's dominant supplier of rare earths.

The new law comes amid heightening trade tensions between China and the US in the run-up to November's US presidential election. Washington has restricted supplies of US materials to Chinese telecommunications giant Huawei and leaned on its allies to bar the company from their 5G networks, citing national security concerns. It also imposed export restrictions on China's largest microchip manufacturer SMIC earlier this month.

Beijing in September announced a development plan for "strategic emerging industries", in reaction to the impact of the Covid-19 pandemic on supply chains and rising protectionism in the global economy. Chinese President Xi Jinping is also pushing a "dual circulation" development model, under which China aims to pivot towards domestic consumption amid an increasingly hostile environment for global trade.

By Kevin Foster