Will China's upcoming export controls impact your business?

09 July 2018

Brian Mulier, Goran Danilovic, Sven-Michael Werner, Serena Du

Companies having China-related operating activities should watch out for and anticipate on the upcoming transformation of China's export control framework and system. China's released draft Export Control Law ("ECL") , currently pending introduction at the National People’s Congress, may affect major MNEs and SMEs operating in- and outside China which are engaged in the manufacture, development, use and/or supply of China-related products (including components) and technologies – especially – in the high-tech sector.

It is no secret that China, driven by its "Made in China 2025" initiative, is focusing on achieving mastery in the production and self-sufficiency of certain key technologies in key industries and sectors (such as aerospace, telecoms, power production and distribution, new IT and integrated circuits, etc.). In essence, China is aiming to become a world-leading tech quality manufacturing power.

You may wonder how? Well, China is among others heavily investing in promoting and upgrading its domestic innovative manufacturing technologies and capabilities (so-called "smart manufacturing") which should ultimately enhance the global high-tech competitiveness of Chinese enterprises. Achieving smart manufacturing as well as self-sufficiency in the relevant key industries will simultaneously increase the export of high-end manufactured items having their origin in China to the rest of the world. As a consequence, China will become far less dependent on imports of high-end technology solutions, products and equipment from foreign and overseas (high-tech) companies.

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