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China tightens its grip on technology exports: what it means for deals, investments and businesses

Neon-lit street in China at night with pedestrians and colourful signs reflected on wet pavement.

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4 November 2026

Why this matters now

Alongside these revisions, businesses need to navigate the interim pre-export registration regime.
The implications of the revisions extend beyond conventional technology licensing to M&A, overseas investment, R&D arrangements and international expansion.
For businesses investing in, acquiring or commercialising Chinese technology internationally, the key question is therefore not simply whether a technology is controlled, but how the proposed transaction could bring the technology within the regime.

How does China’s technology export regime work

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

China categorises every technology intended for export into one of three categories of a tiered regime:

Prohibited: A hard no. Any transfer to an overseas party is illegal.
Restricted: A licence from the Ministry of Commerce (MOFCOM) is required. The relevant agreement only becomes legally effective once the licence is granted.
Everything else: No restrictions. Parties only need to make a short-form registration filing after signing.

The Catalogue, which is updated from time to time, decides which technology sits in the prohibited and restricted categories. Other items are otherwise free to be exported by default. This consultation draft is MOFCOM’s attempt to catch up with the pace of generative AI, large models and the infrastructure behind them.

What is being brought within scope

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

Of the 40 new technology items covered by the draft revisions, 14 fall under prohibited and 26 under restricted.

AI-related technologies alone account for 23 of them, covering large models, AI agents, computing clusters, chip design and information processing. The current proposals widen the scope of technologies under review from individual AI applications to the technology stack behind them, including model weights, training optimisation, agent architecture, chip design, computing clusters.

For large-model technologies, two key factors, depending on their applicability to the technology in question, may trigger export controls:

Sensitivity of training data: whether the model has been trained using China’s “core” or “important” data.
Technical capability: whether the model meets any of the specified thresholds such as compute power, parameter scale or global ranking, with thresholds including compute exceeding 10^26 FLOPs, over 2 trillion parameters, or performance ranking among the world’s top 10.

Separately, the draft revisions cover specified cybersecurity technologies, including AI-driven malicious code generation and AI-assisted vulnerability discovery, subject to the relevant technical criteria and sensitive-use conditions.

Biopharmaceuticals

The focus is on reusable platform technology, high-value proprietary capability, and biosafety-sensitive items (like genetically modifying pathogens). For the specified technologies, licensing a drug candidate or outsourcing R&D without transferring ownership of the underlying technology and process platform (in which the relevant party holds independent IP rights) generally avoid being caught within the prohibited category.

Photovoltaics

This new category covers 12 technologies in polysilicon, wafer, and cell manufacturing. Process packages, engineering design, and key equipment tied to controlled photovoltaic technology — typically accompanying overseas plant construction — would be prohibited from export or require a technology export licence.

Why businesses may need to act before the rules are final

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

An interim registration regime applicable to technology falling within the scope of the draft Catalogue took effect immediately on 16 October 2026. It will stay in force until the amended Catalogue is finalised, giving regulators real-time data on export demand before the rules are locked in.

It is already live in practice: DeepSeek and MiniMax had reportedly completed registrations covering the open-source release and overseas licensing of their large language models, becoming the first movers under the new regime.

It catches more than new deals: exports already underway but not yet finished are in-scope too. Businesses need to register if

transferring in-scope technology ownership overseas (e.g. an IP assignment)
licensing use of domestic in-scope technology to an overseas party (e.g. an IP licence)
the owner or actual controller of domestic in-scope technology changes to an overseas party
MOFCOM says so by separate notice

Implications for transactions

The third trigger is the one to watch. No technology has to physically cross a border — if your transaction changes who owns or controls it, the registration requirement can still bite.

In an asset deal, spotting an ownership transfer is straightforward. In an equity deal, it can be trickier, as the technology might stay registered to the same domestic company, but control over its use and commercialisation can quietly shift overseas. Although the Catalogue itself provides no further guidance on how to determine an “actual controller”, by analogy to the more established control-determination logic under the existing Company Law and the foreign investment security review regime, the assessment would generally look at factors such as the entity’s shareholding ratio, control over voting rights, and influence over major business decisions.

In addition, interim registration doesn’t replace businesses’ other obligations. Existing Catalogue rules still apply, freely exportable technology still needs registering within 60 days, and where applicable, dual-use controls, data export security or foreign investment security review may also apply.

Where does the draft allow room for commercial collaboration?

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

A few carve-outs and facilitation measures stand out accompanying the announcement of the draft Catalogue:

Already public: AI technology that is already in the public domain as it is open-source or distributed through publication of academic papers, is proposed to fall outside the new export controls.
Service, not export: Offering a restricted large model via API, an app, SaaS or lightweight on-device deployment doesn’t count as a technology export. However, deploying the model on overseas servers might be, and will need to be assessed on a case-by-case basis.
Fast-track licensing: Automatic licensing and other facilitation measures will be available for AI in scenarios like open-sourcing restricted AI technologies, running your own overseas computing centre, having chips manufactured overseas from completed designs, collaborative R&D, and international standard-setting. For biopharmaceutical technologies, the fast-track extends to public health emergencies, humanitarian relief and collaborative R&D, and also applies to outbound licensing of proprietary (self-owned IP) target discovery and validation technology.

Three key implications for businesses

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

Plan early

This regime reaches further than classic tech transfer and licensing deals — it touches overseas R&D, manufacturing footprints, M&A, and intra-group technology sharing. Classify technology early and build this into your deal planning ahead of time, whichever side of the border you’re on.

Map the proposed transfer while running regulatory assessments in parallel

As Chinese companies shift from exporting products to building overseas R&D and manufacturing, cross-border tech transfers become routine — and easy to miss. Sharing algorithms, processes, drawings or R&D output with an overseas subsidiary, or supporting an overseas team through secondments or training, might all count.

This aligns with the new Provisions of the State Council on Outbound Investment (Order No. 837): no exporting prohibited technology, no exporting restricted technology without a licence, and no circumnavigating the rules via secondments, technical guidance or training. Get it wrong and the fallout can include hefty fines, a suspended investment, or a forced sale of shares or assets, plus personal penalties.

The direction of travel is consistent: China has recently also announced revised outbound investment measures, effective 1 December 2026, tightening pre-investment approval for sensitive countries and sectors and introducing annual reporting requirements for sensitive overseas investment — part of a broader push to tighten oversight of capital and technology leaving China.

Assess ownership and control if investing in or acquiring a Chinese tech company

The interim registration rule catches deals that shift control of domestic technology overseas, even where nothing physically crosses a border. Check every deal involving Chinese tech assets against this before signing.

Add export control exposure to your IP due diligence: does completion change who owns or controls the target’s core technology? Shareholding percentage alone doesn’t decide this — a minority stake with substantive control rights might also trigger the issue.

Export control and foreign investment security review must not be conflated — they’re two different regimes. Run both assessments in parallel (among others) to identify potential deal timing and execution risks.

To conclude, China is raising the bar for its most valuable AI technology and some others, while leaving the door open for ordinary international collaboration through open-source carve-outs, service-based delivery and fast-track licensing.

The smart move for businesses is to build technology classification into deal planning from day one. Our team is on hand to help you assess exposure under the new regime.

The global shift in heightened technology scrutiny

01
How does China’s technology export regime work
02
What is being brought within scope
03
Why businesses may need to act before the rules are final
04
Where does the draft allow room for commercial collaboration?
05
Three key implications for businesses
06
The global shift in heightened technology scrutiny

China is not alone in tightening the rules around sensitive technology. On 22 October 2026, the US Treasury Department proposed a rule expanding its Outbound Investment Security Program, which would require notice of, or in some cases prohibit, US investments in semiconductors and microelectronics, AI systems, quantum information technology, supercomputing, hypersonic systems and biotechnology in China and certain other jurisdictions. See our team’s summary here.

The parallel tightening on both sides reflects a broader dynamic: as the United States and China compete for leadership in AI and other frontier technologies, both governments are expanding scrutiny of cross-border technology flows and capital, whether through export controls, investment screening or registration requirements.

For businesses operating across both markets, this means technology and investment transactions may increasingly need to be assessed against overlapping, and at times divergent, regulatory regimes on both sides of the Pacific.

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China tightens its grip on technology exports: what it means for deals, investments and businesses

4 November 2026

China tightens its grip on technology exports: what it means for deals, investments and businesses

Share this:

Why this matters now

​

How does China’s technology export regime work

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

What is being brought within scope

​

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

​

Why businesses may need to act before the rules are final

​

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

Implications for transactions

​

Where does the draft allow room for commercial collaboration?

​

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

​

Three key implications for businesses

​

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

​

The global shift in heightened technology scrutiny

​

How does China’s technology export regime work

What is being brought within scope

Why businesses may need to act before the rules are final

Where does the draft allow room for commercial collaboration?

Three key implications for businesses

The global shift in heightened technology scrutiny

​

​

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China tightens its grip on technology exports: what it means for deals, investments and businesses

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Why this matters now