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Sean Stein

Sean Stein is a senior advisor in Covington’s Public Policy Practice Group. Prior to joining Covington, Mr. Stein served as the U.S. Consul General in Shanghai. He has over twenty years of diplomatic experience in Asia and has served in leadership positions in China, Washington, and the region. His insights informed policy making at the highest levels in Washington and he assisted dozens of U.S., Chinese, and international firms to develop strategies, manage risk, and identify opportunities for growth in response to the changing U.S.-China relationship.

Mr. Stein, a non-lawyer, is a key resource to businesses on issues related to political risk, public affairs, problem solving, and communications. He regularly assists companies facing acute or long-term issues to resolve them, often through discussions with U.S. and Chinese government officials. He is well placed to provide strategic advice to U.S. and international clients on issues relating to securing market access and protecting investments in China, assessing risk, navigating trade controls, sanctions, and supply chain restrictions, and resolving disputes and regulatory investigations.

Mr. Stein is available to brief clients on developments in within China and China’s relations with other countries and regions.

The field of artificial intelligence (“AI”) is at a tipping point. Governments and industries are under increasing pressure to forecast and guide the evolution of a technology that promises to transform our economies and societies. In this series, our lawyers and advisors provide an overview of the policy approaches and regulatory frameworks for AI in jurisdictions around the world. Given the rapid pace of technological and policy developments in this area, the articles in this series should be viewed as snapshots in time, reflecting the current policy environment and priorities in each jurisdiction.

The following article examines the state of play in AI policy and regulation in China. The previous articles in this series covered the European Union and the United States.

On the sidelines of November’s APEC meetings in San Francisco, Presidents Joe Biden and Xi Jinping agreed that their nations should cooperate on the governance of artificial intelligence. Just weeks prior, President Xi unveiled China’s Global Artificial Intelligence Governance Initiative to world leaders, the nation’s bid to put its stamp on the global governance of AI. This announcement came a day after the Biden Administration revealed another round of restrictions on the export of advanced AI chips to China.

China is an AI superpower. Projections suggest that China’s AI market is on track to exceed US$14 billion this year, with ambitions to grow tenfold by 2030. Major Chinese tech companies have unveiled over twenty large language models (LLMs) to the public, and more than one hundred LLMs are fiercely competing in the market.

Understanding China’s capabilities and intentions in the realm of AI is crucial for policymakers in the U.S. and other countries to craft effective policies toward China, and for multinational companies to make informed business decisions. Irrespective of political differences, as an early mover in the realm of AI policy and regulation, China can serve as a repository of pioneering experiences for jurisdictions currently reflecting on their policy responses to this transformative technology.

This article aims to advance such understanding by outlining key features of China’s emerging approach toward AI.Continue Reading Spotlight Series on Global AI Policy — Part III: China’s Policy Approach to Artificial Intelligence

On July 3, 2023, China’s Ministry of Commerce (“MOFCOM”) and General Administration of Customs (“GAC”) announced restrictions on the export of gallium and germanium. Starting August 1, 2023, Chinese exporters of gallium, germanium, and certain related chemical compounds must obtain export licenses from MOFCOM before exporting these materials.

Gallium and germanium are “minor metals” produced as a byproduct during the refining process of other metals, such as zinc and aluminum. Gallium and germanium are integral to producing semiconductor wafers, integrated circuits, light-emitting diodes, electric vehicles, solar cells, fiber-optic cables, and other electronic components. The United States classifies both metals as critical to U.S. economic and national security.

While China’s announcement does not explicitly target any country, the government has said the restrictions are necessary to protect China’s national security, leading many observers to believe they may be a response to export controls on semiconductors imposed by the United States in October 2022 and similar measures undertaken by U.S. allies, including Japan and the Netherlands. The China Daily quoted a former Chinese vice minister of commerce as saying, “This is just the beginning of China’s countermeasures, and China’s tool box has many more types of measures available. If the high-tech restrictions on China become tougher in the future, China’s countermeasures will also escalate.” 

China’s Latest Export Measures

These new export restrictions are partly based on China’s Foreign Trade Law and, in particular, the 2020 Export Control Law, which authorizes the government to impose restrictions on exports of certain items to “safeguard national security and interests, fulfill international obligations such as non-proliferation, and strengthen and standardize export controls.”  According to the announcement, beginning August 1, 2023, exporters of gallium metal, germanium metal, and 12 associated compounds will be required to obtain licenses from MOFCOM prior to export from China. The announcement of the export restrictions details the specific customs classification codes of covered commodities to help exporters determine whether an item will be subject to the new restrictions. Notably, the new rules apply only to these specific commodities, not to finished products that incorporate them.Continue Reading China Slaps Export Restrictions on Two Critical Metals

On March 7, 2023, during the annual National People’s Congress (“NPC”) sessions, China’s State Council revealed its plan to establish a National Data Bureau (NDB) as part of a broader reorganization of government agencies. The plan is being deliberated by the NPC and is expected to be finalized soon. 

According to the draft plan, the new National Data Bureau will be a deputy ministry-level agency under the National Development and Reform Commission (“NDRC”), China’s main economic planning agency that is in charge of industrial policies.  The new bureau will be responsible for, among other areas, “coordinating the integration, sharing, development, and utilization of data resources,” and “pushing forward the planning and building of a Digital China, a digital economy, and a digital society.” 

The plan specifies the new agency will take over certain portfolios currently managed by the Communist Party’s Central Cyberspace Affairs Commission (the party organ that supervises the Cyberspace Administration of China, “CAC”) and the NDRC. Specifically, the NDB will assume responsibility for “coordinating the development, utilization, and sharing of important national data resources, and promoting the exchange of data resources across industries and across departments,” a function currently performed by CAC.  The NDB will also absorb the NDRC teams responsible for promoting the development of the digital economy and implementing the national “big data” strategy.Continue Reading China Reveals Plan to Establish a National Data Bureau

As discussed in our previous article on the topic, China’s new 14th Five-Year Plan is a vast document that outlines the country’s ambitious plans for the 2021-2025 period. Technology and the environment are two main themes of the plan, with several chapters dedicated to describing how China’s leaders hope to steer the country into an

As discussed in our previous article on the topic, China’s 14th Five-Year Plan (“FYP”) is a vast document that outlines the country’s ambitious plans for the 2021-2025 period. Technology is a core focus of the plan, with several chapters dedicated to describing how China’s leaders hope to transform the country into an innovation powerhouse. The

On March 13, 2021, China’s National People’s Congress (NPC) approved the outline of the country’s 14th Five-Year Plan, covering the period 2021-2025. The plan’s economic and social development targets provide critical signposts that companies—both foreign and domestic—would be wise to heed when determining their own plans for the coming months and years in the Chinese market. The full text of the plan can be accessed here in its original Chinese. This article will be updated with a link to an English translation once it becomes available.

The five-year plan is the centerpiece of the Chinese system of industrial planning and policy. Reflecting the transformation of the country over the past 70 years, the content and purpose of the five-year plan has changed substantially since the first plan was issued in Mao Zedong’s China in 1953. As the economy has evolved from a pure command economy to one in which the market plays a greater role, albeit with substantial engagement and interventions by the government, the five-year plan has evolved as well. Early plans set production targets; modern plans are a mixture of principles, guidelines, and targets designed to steer the country’s development. This evolution has not reduced the importance of the five-year plan—it remains a central feature of the Chinese economic system—but it does affect how it should be interpreted and how its guidance is implemented in practice. Ultimately, the five-year plan’s purpose is to set strategic goals, focus government work, and guide the activities of market and non-market entities in China. In developing the 14th Five-Year Plan, China’s leaders set an ambitious agenda to “promote high-quality development in all aspects, including the economy, environment, and people’s livelihood and wellbeing, and realize the rise of China’s economy in the global industrial chain and value chain.”
Continue Reading China’s 14th Five-Year Plan (2021-2025): Signposts for Doing Business in China

Public Policy

The recently concluded legislative session of China’s National People’s Congress (NPC) sheds light on the policies and programs that will affect international businesses with operations and investments in China over the coming year and beyond. This year’s meeting, which concluded on March 11, was particularly significant because the NPC reviewed and approved the country’s five-year plan for 2021 to 2025 and a document that outlined long range objectives through 2035. The annual NPC sessions are largely ceremonial events, but they are nevertheless indicative of the Chinese Government’s priorities.

Chinese officials are formally evaluated for their effectiveness implementing these plans, so whole-of-government and industry efforts will be undertaken to ensure they are met. Companies with exposure to China should understand how the year’s goals and the plan’s targets may affect their businesses. This article discusses the top lines from the legislative session. Future articles will examine in further detail policy initiatives, including in specific sectors, relevant to clients with China-related business activities.Continue Reading Key Takeaways from China’s National People’s Congress