Licensing a Chinese Biopharma Asset: What China's Technology Export Rules Actually Restrict

In-licensing a Chinese-origin molecule has become routine for Western pharma, and the question we are asked first is almost always the wrong one: can Beijing stop this deal? For the great majority of therapeutic assets, the answer is that nothing about the licence needs anyone's permission. What does need attention is duller and more consequential — how the technology is classified, whether the contract has been registered, and what data travels with the molecule. Get those wrong and the deal is not blocked; it simply does not get paid.

1. The deal is a technology export — classify it first

China administers technology exports under the Regulations on Technology Import and Export Administration, which sort all technology into three categories and attach a different procedure to each.

• Prohibited — cannot be exported at all.
• Restricted — subject to licence administration and, in the words of the regulations, shall not be exported without a licence (Article 33). In practice the Chinese party obtains a letter of intent from its provincial commerce authority before making a binding commitment, and the contract takes effect only when the export licence issues.
• Freely exportable — everything not listed. The contract takes effect on execution; the Chinese party registers it with the commerce authorities and receives a registration certificate (Article 40).

Which bucket applies is decided by the Catalogue of Technologies Prohibited or Restricted from Export, issued jointly by the Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology (MOST). The classification is a question about the technology, not about the counterparty, the deal value, or where the licensee is incorporated. It is the first thing to settle in diligence, and it is settled by reading the catalogue against the actual scope of the licence grant.

2. What the catalogue really covers in life sciences

The catalogue was substantially revised on 21 December 2023, effective immediately. The revision was a liberalisation in aggregate: controlled entries fell from 164 to 134 — 34 deleted, 4 added, 37 modified.

The life-sciences headline is what did not survive. The consultation draft published in December 2022 would have brought CRISPR gene editing and synthetic biology into the controlled list. After industry comment, neither was carried into the final catalogue. What was added to the prohibited list is an entry on human cell cloning and gene-editing technology for human use, whose control points are aimed at cloning and at editing the human germ line — embryonic cells, egg cells and sperm cells — rather than at somatic gene therapy generally.

This matters because a large share of the published commentary on “China restricting gene editing exports” describes the 2022 draft rather than the rule in force. If a diligence memo tells you a CRISPR-derived asset is export-controlled in China, ask which document it is reading.

Entries that remain restricted are mostly about making things rather than discovering them — biotechnology drug production technology, preparation and processing technology for tissue-engineered medical device products, and traditional Chinese medicine resources and processing. Two practical consequences follow. First, a pure licence of a clinical-stage compound and its data package usually sits outside the catalogue, while a process and manufacturing transfer attached to the same relationship may not. Second, the catalogue has a date on it: it was last amended on 15 July 2025, a revision that restricted battery cathode, lithium and gallium technologies and touched nothing in pharma. Classification is a point-in-time answer, so re-run it whenever the scope of the transfer expands.

3. The registration certificate is the payment gate

For a freely exportable asset, registration is not an approval and not a condition of the contract's validity — which is exactly why it gets treated as an afterthought and then holds up the money. Registration is completed online with the commerce authorities and the certificate is typically issued within about three working days.

The reason it cannot be skipped is Article 42: the export licence or the registration certificate is what the parties use to go through foreign-exchange, banking, taxation and customs formalities. A Chinese bank asked to remit or receive money under a technology contract will want to see it. So the sequence that matters commercially is not sign, then pay — it is sign, register, then pay. Upfront payments in Chinese out-licensing deals slip for exactly this reason far more often than they slip for any regulatory objection to the deal.

Because the filing is the Chinese party's to make, a foreign licensee has no direct way to fix a delay. That belongs in the contract rather than in hope: make delivery of the registration certificate a condition to the upfront payment, put a hard deadline and a cooperation covenant on the licensor, and agree who carries the risk if classification turns out to require a licence rather than a registration.

4. Human genetic resources — the constraint that is real

The regime that genuinely shapes Chinese life-sciences deals is not the export catalogue but human genetic resources (HGR). The Implementing Rules issued by MOST took effect on 1 July 2023, and they reach further than most foreign counterparties expect.

• Who counts as foreign. A “foreign party” includes not only offshore entities but entities established in China that are under foreign actual control — broadly, more than 50% of shares or voting rights, directly or indirectly, with VIE structures expressly caught. Your China subsidiary may be on the foreign side of this line.
• Materials versus information. HGR materials (samples containing genetic material) cannot be exported without approval, and foreign parties cannot collect or preserve them in China except in collaboration with a Chinese partner. HGR information — genes, genome data and other information generated from HGR materials — is provided to foreign parties on the basis of an advance report to the authorities together with a backup copy of the information.
• What is carved out. Article 2 of the Implementing Rules excludes clinical data, imaging data, protein data and metabolic data from HGR information. A clinical data package, on its own, is generally not the problem. Genomic and sequencing data is.
• When a security review is triggered. Providing HGR information abroad requires a security review where it involves important genetic families, specific regions, exome or genome sequencing of more than 500 people, or other circumstances affecting public health or national security.
• Collaborative trials. International collaborative clinical trials run for the purpose of a Chinese marketing authorisation follow a filing route with MOST rather than full approval where no export of HGR is involved.

Note that this sits alongside, not instead of, China's personal-information rules: patient-level personal data leaving China also needs a lawful transfer route under PIPL, which we set out in PIPL cross-border data transfer: the three routes. HGR and PIPL are separate filings answering separate questions, and a deal can clear one and fail the other.

5. What to put in the term sheet

Five items, all of which are cheap to agree before signing and expensive to argue afterwards:

1. A classification opinion on the licensed technology against the catalogue in force at signing, scoped to the actual grant — compound, data, know-how, and any process technology.
2. A licensor covenant to make the registration (or licence) filing within a fixed number of days, with the certificate delivered as a condition to the upfront payment.
3. Allocation of classification risk — what happens if the authorities take the view that a licence is required, including a long-stop date and who bears the cost of the application.
4. A data schedule separating clinical, imaging, protein and metabolic data from genomic data, with HGR filings and PIPL transfer routes assigned to a party by name.
5. A dispute clause that survives contact with a Chinese counterparty — institution, seat, governing law and language written out. The drafting traps are set out in the arbitration clause that decides enforceability.

The pattern behind all five is the same one that shows up across foreign transactions in China, and which we describe for the buy-side in foreign capital is returning to China through a different door: the risks that make headlines are rarely the risks that stop deals. Filings, sequencing and payment mechanics do that — quietly, and usually a quarter later than anyone planned for.

Frequently asked questions

Sources

• Regulations on Technology Import and Export Administration of the PRC — Articles 33 (licence for restricted technology), 40 (registration of freely exportable technology) and 42 (certificate used for foreign-exchange, banking, taxation and customs formalities).
• Covington — China revises the Catalogue of Technologies Prohibited or Restricted from Export (21 December 2023; entries reduced from 164 to 134).
• KPMG — China's tighter grip on technology export restrictions and licensing procedures — confirms CRISPR gene editing fell outside the scope of the final catalogue, and lists the life-sciences entries retained.
• China Briefing — HGR Implementation Rules, key points for foreign stakeholders (in force 1 July 2023; exclusions; the 500-person sequencing trigger).
• Morgan Lewis — How China's detailed HGR rules may impact multinational life-sciences companies — foreign actual control, filings and security review.
• Internal: PIPL cross-border data transfer; the China arbitration clause; foreign capital is returning to China through a different door.

This article is general information for foreign companies, not legal advice on any specific matter. Rules and practice change; please take advice on your facts.

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