Authorities in Beijing are set to pass legislation restricting exports deemed essential to national security, Bloomberg reported on Friday.
The National People's Congress Standing Committee is expected to pass its Export Control Law in a session concluding on Saturday, the report said.
The new law will target materials and technologies placed on a control list, including Chinese firms and companies with foreign investment, it added
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The news comes amid further measures taken by Beijing, including a list of tech export restrictions and 'unreliable entity' list to counter Washington's Entity List and sanctions.
“Chinese authorities may have learned a lesson from the U.S. and other countries,” Qing Ren, partner at Global Law Office, told Bloomberg.
But China's list was much smaller than Washington's Entity List and was limited to materials used in biological, chemical and nuclear weapons, Ren said, adding that more US tech would be subject to controls if the list expands.
China's draft law would reciprocate measures against countries or regions who have “abused export control measures and damaged China’s national security and interests,” a Xinhua report revealed.
According to Chinese media on Thursday, lawmakers have suggested targeting source codes, documents and algorithms, allowing Beijing to restrict competitive technologies in 5G, artificial intelligence and quantum computing.
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The news comes after a top mainland economist had reportedly said in Chinese media Beijing could potentially cut pharmaceutical exports to the US if Washington blocked access to key semiconductor technologies.
Further statements found that Beijing could also block US tech firm Nvidia's crucial $40bn buyout of British chip designer Arm, which requires the Chinese government's consent along with the US and UK.
Chinese president Xi Jinping warned in early September that the Chinese Communist Party (CCP) would never allow foreign governments and entities to cross five "red lines" such as dividing the Chinese people from the CCP.
US president Donald Trump and his administration have launched a massive campaign against Chinese tech firms, including Huawei Technologies, WeChat's Tencent, TikTok's ByteDance and Semiconductor Manufacturing International Corp, as well as numerous others restricted by an Entity List in May last year, citing national security.
To date, the US has not provided specific cybersecurity evidence for its claims, sparking anger from execs and officials in Beijing, according to officials from Huawei.