China passes law to restrict exports of sensitive technology

Legislation follows rising tensions with US that has seen tech companies targeted by Washington. Details of law have yet to be made public, but proposals are intended to protect national security. — SCMP

China’s top legislature passed a law to restrict the export of sensitive goods, services and technologies on Saturday.

The final version of the legislation has not yet been made public, but draft proposals published in June said the law was designed to protect national security by regulating the export of sensitive items that appear on a control list.

The Export Control Law comes amid escalating tensions with the United States and state broadcaster CCTV reported that it will come into force in December.

During the final review of the legislation, Ouyang Changqiong, a delegate to the National People’s Congress, proposed that the law should explicitly cover areas such as source codes and algorithms, state-owned Legal Daily reported.

Another delegate Zhang Yesui said that the law should strengthen protections for technologies such as 5G and quantum communications, where China was a world leader.

“In a very practical sense, it is an incremental move down the road that both China and the United States have been on for quite some time,” said Nathaniel Rushforth, an American lawyer and cybersecurity specialist at Shanghai-based DaWo Law Firm.

He said that “companies on both sides need to continue preparing for much, much more examination, especially in more strategically sensitive industries”.

But “this doesn’t mean business between the two countries is even remotely being shut down, rather that compliance with sometimes unclear national laws and interests will be increasingly scrutinised”, he said.

Tensions between China and the US have escalated recently and spilled over into the realm of technology. Big names such as Huawei, TikTok, WeChat and Semiconductor Manufacturing International have all found themselves in Washington’s cross hairs.

The US government threatened to block TikTok unless its Chinese parent company ByteDance sold the popular video-sharing app and the fate of a deal with Oracle and Walmart is still hanging in the balance.

In August, China updated its export control catalogue to include two key technologies used by TikTok, including speech recognition.

ByteDance said in late September that it has applied for a licence to comply with the recently revised Chinese rules, but no further information has been provided. – South China Morning Post

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