The Ministry of Foreign Trade and Economic Cooperation has issued new regulations relating to technology transfers to and from China. Under the new regulations, technology is divided into three categories: (1) that which is freely transferable; (2) that for which restrictions apply and (3) that for which transfer is banned. However, it should be noted that the category into which a particular piece of technology falls may depend upon whether it is to be imported into China or exported from it. For example, import of technology relating to non-ferrous metal production and the petrochemical industry is banned, whereas the list of technologies for which export is banned includes traditional Chinese medicine and computer network security.

So far as technology in the first category is concerned, it is still necessary to register contracts with the authorities, although, except in the case of major projects, this will be able to be done locally. The authorities are required to issue a registration certificate within three working days of submission of the agreement and the necessary supporting documents. A registration certificate will still be required before any money can be remitted out of China. Submission can be made on-line. Certain clauses, however, will still be unacceptable such as those which include conditions unrelated to the technology transfer, requirements to pay royalties on expired or invalidated patents, restrictions on dealing in similar or competing technology, unreasonable restrictions on the quantity produced and the sale price, unreasonable control over the raw materials or parts to be used and unreasonable control over the export of the products produced. The prior limitations on royalty rates and the duration of the agreement have, however, been removed.

So far as "restricted technology" is concerned, agreements are subject to review of the trade and technical aspects of the agreement. Such agreements can only become effective when an import or export license is granted as appropriate. Normally, prior approval will be required for the concept of the transfer before license negotiations can be commenced.