China passed a new law to restrict sensitive exports to protect national security, helping Beijing gain reciprocity against US as tech tensions mount. The country’s top legislative body, the National People’s Congress Standing Committee, adopted the measure on Saturday that applies to all companies in China, including foreign-invested ones.
The law will be effective Dec. 1. Souring ties between China and the US had led Washington to take action against several Chinese companies including Huawei Technologies Co., ByteDance Ltd.’s TikTok app, Tencent Holdings Ltd.’s WeChat and Semiconductor Manufacturing International Corp. The new law provides a framework for Beijing to better fight back.
While its existing control list is much narrower than the one used by the US, the country’s commerce ministry made an amendment in August that included technology such as algorithms and drones. The list could be further expanded to include even more products and technologies.
The law stipulates export controls over items of both civilian and military use, military and nuclear products, as well as “goods, technologies and services” that are related to national security, including data related to them. Relevant government departments have been tasked to publish lists of controlled items.
Under the law, China can take reciprocal measures if any country or regions abuse their export controls in ways that hurt its national security and interest.
Violation of the new export control law will lead to fines of as much as five million yuan ($746,500) and revocation of export licenses. Breaches that jeopardize national security and interests will also face criminal charges, with organizations and individuals outside of China also punishable under the law.
Whether Beijing will allow the export of valuable Chinese technology is one of the biggest uncertainties hovering over the partial sale of TikTok to Oracle Corp. and American investors. China in August asserted the right to block the deal by adding speech recognition and recommendation technology — the core of TikTok’s global popularity — to a list of regulated exports.