China's New Technology Import And Export Legislation: A Step Toward a Freer Market

By Bill Shouyun Tong, Allen & Overy

The State Council issued the Regulations of the People's Republic of China on the Administration of Technology Import and Export  (中华人民共和国技术进出口管理条例) (the New Technology Import and Export Regulations or the Regulations) on December 10 2001, with effect from January 1 2002. The Regulations have introduced a number of significant changes to the technology licence regime that has been in place since 1985 and will have a significant impact on the licensing of technology by foreign companies to Chinese companies, including foreign investment enterprises.

 The New Technology Import and Export Regulations have replaced the PRC Administration of Technology Import Contracts Regulations (the 1985 Regulations) promulgated by the State Council on May 24 1985 and the PRC Administration of Technology Import Contracts Regulations Implementing Rules (the 1987 Implementing Rules), approved by the State Council on December 30 1987 and promulgated by MOFTEC on January 20 1988. In addition, although the Regulations make no specific reference to the Administration of Trade in Importation of Technology and Equipment Tentative Procedures (the 1996 MOFTEC Tentative Procedures) promulgated by MOFTEC on March 22 1996, these procedures have been implicitly repealed as a result of the enactment of the Regulations.

THE SCOPE OF APPLICATION

The New Technology Import and Export Regulations apply to the transfer of technology from foreign companies to Chinese companies as well as the transfer of technology from Chinese companies to foreign companies, no matter whether the transfer is effected by way of trade, investment or economic and technological cooperation. Transfer of technology is defined to include the transfer of patent rights, transfer of the right to apply for a patent, licence to implement a patent, transfer of know-how, and transfer of technology through technical services or other means.