China Proposes AI Export Controls: What Changes for the Industry

On October 16, 2026, China's Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology issued Announcement No. 48, proposing to add 40 new technologies to the Catalogue of Technologies Prohibited or Restricted from Export. Of these, 23 relate to artificial intelligence — a number that reveals how deeply AI technology has become entangled with Chinese national security and global technology competition.

What the Proposal Envisages

Of the 40 technologies at issue, 14 would be prohibited from export under any circumstances (code "J"): large models trained on China's core data, AI-driven malicious code generation technologies, high-performance AI agents for sensitive scenarios, and cell and gene therapy platforms. The remaining 26 would be subject to mandatory licensing (code "X"): AI models with more than 2 trillion parameters or "globally leading" capabilities, AI and storage chip designs, industrial-scale computing cluster technologies, and even translation technologies for Chinese minority languages.

The remarkable detail: the proposal is already in force in practice through a temporary pre-export registration system. This means companies intending to transfer listed technology abroad — whether through IP sales, licensing, or ownership changes — must already register their operations, under penalty of sanctions. The public consultation period runs until November 15, 2026.

The Technical Thresholds

MOFCOM defined three quantitative thresholds for regulating large models: ≥10²⁶ floating-point operations (100 sextillion), ≥2 trillion parameters, or "globally leading capability" (能力达到全球领先水平). According to ChinaTalk, which closely tracks Chinese tech policy, no Chinese model released as of October 20 had crossed the first threshold, indicating the regulation targets the future rather than the immediate present.

The 10²⁶ FLOPs threshold mirrors California's SB 53, reinforcing MOFCOM's narrative that China is merely "referencing internationally accepted standards." The numerical symmetry with Washington can be read as defensive posturing — if the U.S. Commerce Department already controls similar chips and technologies, Beijing can justify its own restrictions under the banner of "international standard practice."

The Manus Case and Redomiciliation

One of the most significant aspects of the proposal is the third registration trigger: changes in ownership or effective control of technology to foreign entities. This legally codifies the Manus case — the Chinese AI agent startup that attempted to sell itself to Meta after relocating to Singapore. Meta signed a purchase agreement in December 2025, but a security review led by the NDRC (National Development and Reform Commission) led to the deal's reversal.

With Announcement 48, similar transactions no longer rely solely on investment review — they now require export licensing under the export control regime. Redomiciliation is no longer sufficient to escape Chinese jurisdiction.

Open Source and the Paradox of Automatic Licensing

For technologies already in the public domain — through open source release or academic publication — the proposal establishes that they are not subject to control. But for any unreleased technology, open sourcing would require an "automatic license" (自动许可). What "automatic" means in this context remains vague: in the companion Q&A, the MOFCOM spokesperson said it would "basically" achieve "immediate, license issued" (基本实现即报即出). The intentional ambiguity is, in itself, a tool of bureaucratic control.

Cloud Services: The Regulatory Loophole

There is a crucial distinction in the announcement: for technologies on the "restricted" list, serving international customers through one's own overseas data centers requires an export license (though the text itself suggests accelerated processing). But serving customers via API, apps, or SaaS does not constitute a technology export. For major Chinese platforms like Tencent, ByteDance, and Alibaba — which already have overseas data centers — this means the business model remains intact.

Nomura analysts noted that this structure benefits internet giants over independent Chinese labs, which would rely more on licensing and IP sales than on their own global infrastructure.

The Broader Context

Announcement 48 did not come alone. On October 19, MOFCOM issued four complementary announcements revising controls on drones, excavators, and tunnel-boring machines. Throughout October, the Chinese government also introduced regulations on overseas investments prohibiting the transfer of sensitive technologies and data. Taken together, the signal is clear: as China's industry grows confident in its competitiveness, the state is closing its technological doors.

According to the Global Times, the measure reflects "confidence in Chinese technology" — those who control the exit, not those who block the entry. The historical comparison is inevitable: China already controlled rare earth exports, solar equipment, and now begins to control the export of AI itself.

The question remains: when Beijing starts exporting its own models — under tight control — will Western markets have alternatives, or will the restriction become asymmetrical?

Sources: Ministério do Comércio da China (MOFCOM), Bloomberg, ChinaTalk, The Hindu BusinessLine, Pillsbury Winthrop Shaw Pittman LLP

✓ Independent sources cross-checked and verified before publishing