CHAPTER 1 GENERAL PRINCIPLES

ARTICLE 1

These regulations are formulated in accordance with the Foreign Trade Law of the People’s Republic of China (hereinafter “Foreign Trade Law”) and other relevant laws and regulations in order to provide rules for the administration of import and export of technologies, safeguard the order of import and export of technologies and promote national economic and social development.

ARTICLE 2

Import and export of technologies in these Regulations refer to the transfer of technologies from outside of the People’s Republic of China (hereinafter “P.R. China”) into P.R.China or from inside of P.R. China to outside of P.R. China by way of foreign trade, investment, or economic or technological cooperation.

Such transfer includes assignment of patent rights or rights to apply for patents, licensing of rights to implement patents, assignment of technical know-how, technical service and etc.

ARTICLE 3

The State adopts a unified system for the administration of import and export of technologies in order to safeguard fairness and freedom of import and export of technologies.

ARTICLE 4

Import and export of technologies should be conducted in accordance with the industrial, technological and social development policies of the State and in the interest of the scientific and technological progress and the development of economic and technological cooperation between China and other countries, and of the protection of the economic and technological rights and interests of China.

ARTICLE 5

The State permits free import and export of technologies unless otherwise forbidden by laws and administrative regulations.

ARTICLE 6

The Competent authority in charge of foreign trade and economic cooperation under the State Council (hereinafter “the Competent Authority under the State Council”) ha the responsibility to administer the import and export of technologies of the whole country in accordance with the Foreign Trade Law and these Regulations. The Competent authorities in charge of foreign trade and economic cooperation under the People’s Governments of provinces, autonomous regions, municipalities under the direct control of the Central Government has the responsibility to administer the import and export of technologies within their administration area.

Other relevant authorities under the State Council shall also have the responsibility to administer projects of import and export of technologies in accordance with regulations of the State Council.

CHAPTER 2 ADMINISTRATION OF IMPORT OF TECHNOLOGIES

ARTICLE 7

The State encourages import of advanced and useful technologies.

ARTICLE 8

Import of technologies which fall within the scope of Article 16 or 17 of the Foreign Trade Law shall be prohibited or restricted.

The Competent Authority under the State Council shall, together with other relevant authorities under the State Council, formulate, readjust and publish the Catalogue of Technologies the Import of Which Are Prohibited or Restricted.

ARTICLE 9

Technologies that are prohibited from being imported shall not be imported.

ARTICLE 10

Technologies that are restricted to be imported can be imported only with licenses and shall not be imported without licenses.

ARTICLE 11

To import technologies that are restricted to be imported, an application shall be submitted to the Competent Authority under the State Council together with supportive documents.

In case a prior approval for import of technologies is needed, the approval documents of the relevant authorities shall also be submitted.

ARTICLE 12

Upon receiving the application, the Competent Authority shall review the application together with the relevant authorities under the State Council, and shall decide to approve or disapprove the application within 30 working days upon receiving the application.

ARTICLE 13

If the application is approved, the Competent Authority under the State Council shall issue a Preliminary License for import of technologies.

The importer of the technologies may enter into contracts of import of technologies upon obtaining the Preliminary License.

ARTICLE 14

Upon signing the contract of import of technologies, the importer shall submit copies of the contract, together with other supportive documents, to the Competent Authority under the State Council in order to apply for a License of Import of Technologies.

The Competent Authority under the State Council shall, upon reviewing the authenticity of the contract, decides to grant or not grant the License of Import of Technologies within 10 working days upon receiving the above the documents.

ARTICLE 15

The importer may, when submitting the application to the Competent Authority under the State Council in accordance with Article 11 of these Regulations, also submit copies of the contract of import of technologies which are already signed.

The Competent Authority under the State Council shall review both the application and the authenticity of the contract, and shall decide to grant or not grant the License within 40 working days upon receiving the above documents.

ARTICLE 16

If deciding to grant the License, the Competent Authority under the State Council shall issue the License of Import of Technologies. The contract of import of technologies shall be effective upon the date when the License is issued.

ARTICLE 17

Technologies that can be imported freely may be imported only by registering the import contracts.

The contracts of import of technologies that can be imported freely shall become effective in accordance with the law and shall not be subject to the registration of the contracts.

ARTICLE 18

To import technologies that can be imported freely, the following documents shall be submitted to the Competent Authority under the State Council for purpose of registration of the contract of import of technologies:

(1) An application letter,
(2) Copies of the contracts of import of technologies,
(3) Documents evidencing the legal status of the contractual parties.

ARTICLE 19

The Competent Authority under the State Council shall register the contract and issue registration certificate within 3 days after receiving the documents listed in Article 18.

ARTICLE 20

The importer shall present the License or the registration certificate in order to go through the formalities at the authorities of foreign exchange, banking, taxation and customs.

ARTICLE 21

In case revision is made to the main content of the contract of import of technologies for which a License or a registration certificate has been obtained, the importer is required to apply for a new License or a new registration certificate.

The termination of a contract of import of technologies for which a License or a registration certificate has been obtained shall be recorded at the Competent Authority under the State Council.

ARTICLE 22

In case a technology is imported by the foreign party as investment in a foreign-invested enterprise, the contract of import of technologies shall be reviewed or registered in accordance with the procedure for approval of the establishment of foreign-invested enterprises.

ARTICLE 23

The Competent Authority under the State Council and other relevant authorities under the state Council as well as their employees shall have the obligation to keep confidential of the commercial secrets they have got to known in the process of handling applications for import of technologies.

ARTICLE 24

The assigner or licensor of a contract of import of technologies shall guarantee that it is the lawful owner of the said technologies and therefore has the right to assign or license the technologies.

The assignee or licensee of a contract of import of technologies shall use the technologies pursuant to the contract. Upon being charged for infringing upon the rights of a third party, it shall immediately notify the assigner or the licensor, who shall, upon being notified, assist the assignee or the licensee to remove the obstruction.

The assignee or licensee of a contract of import of technologies shall use the technologies pursuant to the contract, and shall be responsible for any infringement due to its own reasons upon the rights of any third parties.

ARTICLE 25

The assignor or licensor of a contract of import of technologies shall guarantee that the technologies it provides are complete, correct, effective and meet the target agreed upon in the contract.

ARTICLE 26

The assignor or licensor and the assignee or licensee of a contract of import of technologies shall have the obligation to keep confidential of the secret information concerning the technologies which has not been made public pursuant to the scope and term of confidentiality as agreed upon in the contract.

During the term of confidentiality, if the confidential information concerning the technologies are made known to the public not for the reason of the party who is obliged to keep such information confidential, the party’s obligation of confidentiality shall immediately terminate.

ARTICLE 27

During the term of validity of a contract of import of technologies, the right over any improvement on the technologies shall be vested with the party which has made the improvement.

ARTICLE 28

Upon expiration of a contract of import of technologies, the assignor or licensor and the assignee or licensee shall, in accordance with the principle of fairness and reasonableness, agree on the continued use of the technology.

ARTICLE 29

The following restrictive clauses shall not be included in a contract of import of technologies:

(1) Clauses requiring the assignee or licensee to accept such conditions which are not indispensable for the import of the technologies as purchasing unnecessary technologies, raw materials, products, equipment or services;

(2) Clauses requiring the assignee or licensee to pay fees or assume certain obligations for using technologies the patented period of which has expired and the patent of which has been declared as void;

(3) Clauses restricting the assignee or licensee to make improvement on the technologies or to use such improved technologies;

(4) Clauses restricting the assignee or licensee to obtain from sources other than the assignor or licensor technologies similar to or competitive with those provided by the assignor or licensor;

(5) Clauses unreasonably restricting the channels or sources for the assignee or licensee to purchase raw materials, spare parts, products or equipment;

(6) Clauses unreasonably restricting the quantity, type and price of the products of the assignee or licensee;

(7) Clauses unreasonably restricting the export of the products produced by the assignee or licensee by using the imported technologies.

CHAPTER 3 ADMINISTRATION OF EXPORT OF TECHNOLOGIES

ARTICLE 30

The State encourages the export of matured technologies which are ready for industrialization.

ARTICLE 31

Export of technologies which fall within the scope of Article 16 or 17 of the Foreign Trade Law shall be prohibited or restricted.

The Competent Authority under the State Council shall, together with other relevant authorities under the State Council, formulate, readjust and publish the Catalogue of Technologies the Export of Which Is Prohibited or Restricted.

ARTICLE 32

Technologies which are prohibited from being exported shall not be exported.

ARTICLE 33

Technologies which are restricted to be exported can be exported only with a license and shall not be exported without a license.

ARTICLE 34

To export technologies which are restricted to be exported, an application shall be submitted to the Competent Authority under the State Council together with supportive documents.

ARTICLE 35

Upon receiving the application, the Competent Authority under the State Council shall review the application together with the relevant authorities under the State Council in charge of scientific and technological work, and shall decide to approve or disapprove the application within 30 working days upon receiving the application.

In case a confidentiality review by relevant authorities is needed for exporting a restricted technology, such a confidentiality review shall be made in accordance with relevant State regulations.

ARTICLE 36

If the application is approved, the Competent Authority under the State Council shall issue a Preliminary License for export of technologies.

The exporter of the technologies may enter into substantive negotiation and sign contracts of export of technologies only upon obtaining the Preliminary License.

ARTICLE 37

Upon signing the contract of export of technologies, the exporter shall submit the following documents to the Competent Authority of the State Council, to apply for a License of Export of Technologies.

(1) The Preliminary License for Export of Technologies;
(2) Copies of the contracts of export of technologies;
(3) List of technological documents to accompany the export;
(4) Documents evidencing the legal status of the contractual parties.

The Competent Authority under the State Council shall, upon reviewing the authenticity of the contract, decides to grant or not grant the license for export within 15 working days upon receiving the above the documents.

ARTICLE 38

If deciding to grant a license of export, the Competent Authority under the State Council shall issue a License of Export of Technologies. The contract of export of technologies shall be effective upon the date when the License is issued.

ARTICLE 39

Export of Technologies which can be exported freely shall only need registration of the export contracts.

The contracts of export of technologies which can be exported freely shall become effective in accordance with law and shall not be subject to the registration of the contracts.

ARTICLE 40

To export technologies which can be exported freely, the following documents shall be submitted to the Competent Authorities under the State Council for purpose of registration:

(1) An application letter;
(2) Copies of the contracts of import of technologies;
(3) Documents evidencing the legal status of the contractual parties.

ARTICLE 41

The Competent Authority under the State Council shall register the contract and issue a registration certificate within 3 days after receiving the documents listed in Article 40.

ARTICLE 42

The exporter shall present the license or the registration certificate of export of technologies in order to go through the formalities at the authorities of foreign exchange, banking, taxation and customs.

ARTICLE 43

In case that revision should be made to the main content of the contract of export of technologies for which a license or a registration certificate has been obtained, the exporter is required to apply for a new license or a new registration certificate.

The termination of a contract of export of technologies for which a license or a registration certificate has been obtained shall be recorded at the Competent Authority under the State Council.

ARTICLE 44

The Competent Authority under the State Council and other relevant authorities under the state Council as well as their employees shall have the responsibility to keep confidential of the State or commercial secrets they have got to known in the process of handling applications for export of technologies.

ARTICLE 45

Export of nuclear technologies, dual-use nuclear technologies, technologies concerning production of controlled chemicals, controlled military technologies for export shall be regulated by relevant administrative regulations.

CHAPTER 4 LEGAL RESPONSIBILITIES

ARTICLE 46

Persons or organizations that import or export technologies which fall within the Catalogues of Technologies which Are Prohibited from Import or Export or that import or export without licenses the technologies which are restricted from import or export shall face criminal charges of smuggling, illegal business activities, divulgence of State secrets or other crimes. In case the illegal conduct is not serious enough to constitute a crime, the person or organization shall be sanctioned according to the customs laws and regulations or receive a warning from the Competent Authority under the State Council and its illegal profits shall be confiscated and a fine of one to five times of the illegal profits be imposed. In addition, the Competent Authority under the State Council may revoke the right of the person or the organization to engage in activities of foreign trade.

ARTICLE 47

Persons or organizations that import or export out of their licensed scope the technologies which are restricted from import or export shall face criminal charges of illegal business activities or other crimes. In case the illegal conduct is not serious enough to constitute a crime, the person or organization shall be sanctioned according to the customs laws and regulations or receive a warning from the Competent Authority under the State Council and its illegal profits shall be confiscated and a fine of one to three times of the illegal profits be imposed. In addition, the Competent Authority under the State Council may suspend or even revoke the right of the person or the organization to engage in activities of foreign trade.

ARTICLE 48

Persons or organizations that forge, alter or buy or sell licenses of import or export of technologies or registration certificates of contracts of import or export of technologies shall face criminal charges of illegal business activities or forgery, alteration or buying and selling of official documents, certificates, seals and stamps of State organs. In case the illegal conduct is not serious enough to constitute a crime, the person or organization shall be sanctioned according to the customs laws and regulations, or the Competent Authority under the State Council may suspend or even revoke the right of the person or the organization to engage in activities of foreign trade.

ARTICLE 49

Persons or organizations that obtain licenses of import or export of technologies by cheating or by other illegal means shall have their licenses revoked by the Competent Authority under the State Council and their rights to engage in activities in foreign trade may be suspended or even revoked.

ARTICLE 50

Persons or organizations that obtain registration certificates for contracts of import or export of technologies by cheating or by other illegal means shall have their certificates revoked by the Competent Authority under the State Council and their rights to engage activities in foreign trade may be suspended or even revoked.

ARTICLE 51

Employees in charge of the administration of import or export of technologies who violate these regulations by divulging State or commercial secrets they know shall face criminal charges of divulging State Secrets or encroaching upon commercial secrets. If the illegal activity is not serious to constitute a crime, the employees shall be subject to administrative disciplinary actions.

ARTICLE 52

Employees in charge of the administration of import or export of technologies who abuse or neglect their power, or accept or solicit bribes by taking advantage of their positions shall face criminal charges of abusing or neglecting power, bribery or other crimes. If the illegal activities are not serious to constitute a crime, the employees shall be subject to administrative disciplinary actions.

CHAPTER 5 MISCELLANEOUS

ARTICLE 53

Persons or organizations who do not agree with the decision of the Competent Authority under the State Council on the approval, granting of licenses, registration or administrative sanctions may apply for administrative reviews or raise a litigation at the court in accordance with the law.

ARTICLE 54

In case there is any contradiction between these regulations and any provision previously formulated by the State Council concerning import or export of technologies, these Regulations shall prevail.

ARTICLE 55

These Regulations shall enter into force on January 1, 2002. The Regulations on the Administration of Contracts of Import of Technologies published by the State Council on May 24, 1985 and the Detailed Rules for the Implementation of the Regulations on the Administration of Contracts of Import of Technologies approved by the State Council on December 30, 1987 and published by the Ministry of Foreign Trade and Economic Cooperation on January 20, 1988 shall be abolished.

Editor/Compiler: Shanghai International Lawyers