China This Week: Governance Signals That Matter

Xinanigans | Erika Lafrennie

China proposed on October 16 adding 40 technologies, including 23 in artificial intelligence, to its catalogue of prohibited or restricted exports. Fourteen would be banned and 26 would need a licence. Until the catalogue is final, exporters of the listed technologies must register before transferring ownership abroad or letting a foreign entity take control, and pending deals are covered.

Erika Lafrennie reads this as Beijing separating where Chinese firms operate from where their intellectual property lives. From November 18, exporters need a licence to ship tunnel boring machines and their key parts to sensitive countries and regions in dispute with China. On October 21, Wang Yi and Djibouti’s foreign minister, Abdoulkader Houssein Omar, issued a joint communiqué opposing Somaliland’s bid for recognition and any collusion with Taiwan. It commits Djibouti to no specific action. The first marker is November 15, when comments on the catalogue close.

Comment

China’s October 19 controls reach past new machines to the parts that keep existing ones running. They name cutterheads, main drives and the technology to remanufacture tunnel boring machines. A licence decision could therefore fall on spares and rebuilds as well as new orders. A buyer already mid-project in a disputed destination would face a sustainment problem, since a tunnel drive without a replacement cutterhead could stall.

The rules also catch foreign-brand equipment made in China, so a German-branded machine would fall under them. Herrenknecht said in 2024 that Chinese customs delayed machines it built in China for Indian customers for months. Germany’s ambassador to India said in September 2025 that customs had blocked at least three more. Major or complex cases are exempt from the 15-working-day limits and the shipment stays in port, so delay could continue.

Beijing has not said which countries count as in dispute with it, and the rules do not name India. If India fell in that category, an Indian project relying on a Herrenknecht machine built in China would need a licence from November 18.

Strategic Question for Discussion

Which carries more weight for an Indian project relying on a Herrenknecht machine built in China, the licence rule from November 18 or the customs hold that already delayed such machines, and what would tip the balance?

The pattern suggests the customs hold carries more weight, since it delayed such machines for months before any licence category existed. A licence rule at least defines which destinations are covered, whereas a hold on a complex case can run past the 15-working-day limits. The balance would tip if Beijing named India as a disputed destination, because a licence denial would then replace delay as the main risk.

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