Keeping Value Chains at Home
China is tightening export controls to safeguard domestic innovation and manage foreign access to technology, reflecting a strategic shift towards self-reliance amid geopolitical tensions and international restrictions.
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China is increasingly asserting control over technology-related outflows to maintain its dominance in global value chains. The Chinese government is employing a range of export controls, including dual-use regulations, to protect domestic innovation while managing foreign access to critical technologies. This strategy is part of a broader push for "comprehensive national security," which encompasses self-reliance in science and technology. Recent actions, such as export licensing requirements for gallium and germanium, reflect China's response to international restrictions on its technology exports. As Chinese firms ascend the technology value chain, the government is focused on retaining critical innovation capacity within the country. The opaque nature of China's export control regime, combined with its extensive toolkit for managing technology flows, poses challenges for European governments and firms. While China aims to leverage its technological strengths, it must also navigate the risks of encouraging diversification among its trading partners. The recent Third Plenary Session of the Chinese Communist Party emphasized the need to safeguard technology security and build autonomous supply chains, indicating a strategic shift towards self-sufficiency and control over technology inputs and outputs.
- China is enhancing its export controls to protect domestic innovation and manage foreign access to technology.
- The government’s strategy reflects a shift towards self-reliance in science and technology amid geopolitical tensions.
- Recent export licensing requirements for critical materials signal China's response to international technology restrictions.
- The opaque nature of China's export control regime complicates international trade and technology cooperation.
- European firms must prepare for increased challenges in accessing Chinese technology and navigating export controls.
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