China Tightens Its Grip on Exports of Strategic Technologies: What It Means for Technology Deals Involving AI and Biotech

Background

MOFCOM enforces the Foreign Trade Law and the PRC Technology Import and Export Regulations ("TIER") and amends the Catalogue jointly with MOST from time to time. "Prohibited" technologies may not be exported; "restricted" technologies require an export license. This Commentary will focus on the new additions relating to AI and biotech without detailed discussion of photovoltaics.

Announcement 48 should be read together with State Council Order No. 837, which targets transfers of critical Chinese technology through outbound investment, extends ODI review to PRC resident individuals and follow-on offshore transactions, and creates an Outbound Investment Security Review ("OIS Review") process that may prohibit or unwind completed deals.

Covered Transaction Types

The TIER defines "technology export" broadly to include cross-border assignment and licensing of patents, transfers of technical secrets (know-how), and provision of technical services. Order No. 837 adds cross-border dispatch of technical personnel and provision of guidance and training.

Order No. 837 applies where Chinese parties contribute technology to offshore structures in exchange for equity or other offshore interests, while the TIER, the Catalogue, and interim registration apply to exports of the technology itself, including licenses and changes of control. A Chinese biotech company licensing IP to an offshore NewCo for equity (the "NewCo model") could therefore trigger export controls, ODI approval, and potentially OIS Review simultaneously. A pure royalty-bearing license, under which the Chinese licensor receives no equity or other offshore interest as consideration, would generally avoid ODI and OIS Review but may still require technology export licensing or registration and other filings.

Proposed Catalogue Additions: Artificial Intelligence (23 Technologies)

Proposed prohibitions include large models trained on China's "core data" and used to provide services; high-performance AI agents used specifically or mainly in critical information infrastructure, defense, or core government applications; AI-driven malicious code generation and mutation, adaptive evasion, and automated antivirus-evasion technologies; and high-performance deepfake detection technologies.

Proposed restrictions include models trained on "important data"; core technologies (weights, key checkpoints, source code, architecture, and training and inference optimization) for large models exceeding certain technical capabilities; advanced AI agent technologies (task planning, multi-agent collaboration, tool calling, and game decision-making) meeting specified performance thresholds; AI processor and memory chip design; certain interconnection, fault-tolerance, communication scheduling, and heterogeneous scheduling technologies for computing clusters; AI-assisted vulnerability discovery; higher-performance image/video steganography; and certain voiceprint recognition and translation technologies.

Technologies already made public through open-source release or academic publication are excluded, whereas future open-source releases of covered technologies would require an automatic license. Automatic licensing would apply to new open-source releases, overseas chip fabrication, joint R&D using overseas resources, and international standard-setting. According to MOFCOM, overseas local deployment of a restricted model is a technology export, whereas API access, app or web interaction, SaaS, and lightweight on-device deployment are outside the scope of large model export controls.

Proposed Catalogue Additions: Biopharmaceuticals (5 Technologies)

Announcement 48 proposes to prohibit transfers of ownership of proprietary cell and gene therapy (CGT) and siRNA "technology platforms" (reusable, foundational technology sets capable of supporting development of multiple drugs), as well as exports of artificial genetic modification and directed passage technologies for gain-of-function in pathogenic microorganisms.

The platform prohibition expressly excludes out-licensing, outsourced R&D or manufacturing services that do not transfer ownership, and transactions involving specific drug products. Such transactions fall outside the platform prohibition altogether; automatic licensing, discussed below, is relevant only to the restricted target-discovery technologies.

It would also restrict exports of proprietary technologies for discovering and validating novel targets (drug targets not publicly disclosed worldwide) for CGT and siRNA, with streamlined "automatic licensing" available in certain cases, including cross-border out-licensing.

The practical impact will likely fall on acquisitions of platform ownership, including of companies whose principal asset is a qualifying platform. Asset-level transactions, including licenses and acquisitions of specific CGT and siRNA products, may fall outside the scope.

Impact on Technology Deals

Parties to AI and biotech deals should evaluate whether a transaction may be prohibited or require technology export approval if Announcement 48 is adopted, and whether ODI approval or OIS Review applies.

Pending transactions are also covered, because MOFCOM requires interim registration before any technology listed under Announcement 48 is exported. This interim requirement is distinct from the export license required for restricted technologies under the final Catalogue.

Deal timing should account for these approvals. Review of an application to export a restricted technology takes up to about 45 working days in two stages: a preliminary letter of intent and an export license once the signed contract is submitted. In practice, the process usually takes longer, given contract negotiation time and the authorities' discretion to request additional information before treating a filing as complete.

Under the ODI measures published by the National Development and Reform Commission ("NDRC") on October 22, 2026, effective December 1, 2026, NDRC approval of an ODI project takes up to 20 working days, extendable by another 10 working days, excluding time for project evaluations. The details and timeline for OIS Review remain to be seen.