China’s export control legal regime is centered on the Export Control Law (adopted on October 17, 2020, effective December 1, 2020), supplemented by the Foreign Trade Law, the Customs Law, and other laws and regulations. Its subordinate laws and regulations include the Regulations on the Control of Exports of Dual-Use Items and the accompanying List of the People’s Republic of China on the Control of Exports of Dual-Use Items.
The Export Control Law provides for State export control of dual-use items, military goods, nuclear and other goods, technologies, services and other items (hereinafter referred to collectively as controlled items) that are relevant to the safeguarding of national security and interests, and the fulfilment of international obligations such as non-proliferation (Article 2). The concept of “export control” includes the transfer of controlled items from Chinese territory to foreign countries, as well as the provision of controlled items (including services) by Chinese citizens, legal persons and unincorporated organizations to foreign organizations and individuals. Therefore, the provision of technical information and technical services by Chinese citizens to foreign organizations outside China may also fall within the scope of export control under this Law.
In terms of control methods, the State manages mainly through the establishment of control lists and catalogs and the granting of export licenses. In other words, controlled items are defined through the (temporary) export control lists, and the corresponding export control measures are established through an assessment and risk management system that determines the level of risk in terms of the countries and regions to which the controlled items are exported, the end-users and the end-uses. In addition, export activities requiring additional stringent controls are identified through control lists, or blacklists, of importers and end-users. For the items, destination countries and regions, end-users and end-uses listed in the control list, export operators are required to apply for the corresponding licenses and provide the corresponding supporting documents and information during the export process.
It is worth noting that the Export Control Law provides for its own extraterritorial effects. Article 44 provides that organizations and individuals outside the territory of the People’s Republic of China that violate the relevant provisions of the Export Control Law can be held legally responsible. In addition, Article 48 emphasizes the principle of reciprocity, i.e., if any country or region abuses export control measures to jeopardize the national security and interests of China, China may, in the light of the actual situation, take reciprocal measures against that country or region.
The Regulations of the People’s Republic of China on Export Control of Dual-Use Items (the “Control Regulations”) were adopted on September 18, 2024, and came into force on December 1, 2024.
The Control Regulations focus on the detailed control measures, i.e., the types of export licenses, the circumstances in which they are applicable, the manner in which they are applied, and so on. According to Article 15, the export of dual-use items on the control lists is subject to a single license, a general license, or an export certificate. Specifically:
Relevant competent authorities establish a risk management system for end-users and end-uses of dual-use items, assess and verify the risks involved. Specific ways include:
Two-tier blacklisting system: if importers and end-users do not cooperate with verification and provide relevant supporting materials, resulting in the inability to verify the end-user and end-use of dual-use items, the competent authorities may place the importers and end-users concerned on the list of concern. Operators exporting dual-use items to importers and end-users listed on the list of concern may not apply for a general license or obtain an export certificate by registering the information, but may only apply for a single license (Article 26). In more serious cases, such as end-users violating end-use management requirements, the importers and end-users concerned will be put on the control list. Importers and end-users on the control list will be banned or restricted from trading in dual-use items, ordered to suspend the export of dual-use items, and other necessary measures will be taken (Article 29).
The Control Regulations provide for the following foreign and extraterritorial situations:
Article 49 provides that where overseas organizations and individuals transfer and provide the following goods, technologies and services outside China to specific countries and regions for specific purposes and to specific organizations and individuals, the Chinese authority may require the relevant operators to abide by the Chinese regulations: (1) dual-use items manufactured outside China containing, integrating or mixing specific dual-use items originating in China; (2) dual-use items manufactured outside China using specific Chinese dual-use technologies; (3) specific dual-use items originating in China.
The provisions of Article 49 are similar to the special rules under the U.S. EAR (“Export Administration Regulations”) system, such as De Minimis Rule and Foreign-Direct Product Rule, which extraterritorialize China’s control legal system to counteract the U.S. system.
The newly formulated Export Control List of the People’s Republic of China on Dual-Use Items, effective from December 1, 2024, is an important reform initiative to implement the export control legal regime. The List integrates the items under the original regulations on nuclear, missile, biological, chemicals, etc., and integrates dual-use items into 10 major categories of industry sectors, each of which is further subdivided into 5 types of items, which are organized by the coding method of “Arabic numerals+ English letters”, consisting of “1 Arabic numeral + 1 uppercase English letter + 3 Arabic numerals”, similar to the coding of the list of dual-use items in the U.S. and the EU. However, the List does not set out the corresponding customs commodity codes for each category of dual-use items as in the updated Catalogue of Licenses for Import and Export of Dual-use Items and Technologies (hereinafter referred to as “the Catalogue”) in 2023, nor does it repeal the Catalogue. It remains to be seen how the two documents will be used in the future and whether the Catalog will be updated or repealed.
On December 03, 2024, MOFCOM announced in the form of Circular No. 46 of 2024 that: “i. Exports of dual-use items to U.S. military users or for military use are prohibited. ii. In principle, the export of gallium, germanium, antimony, and superhard materials-related dual-use items to the United States shall not be licensed; and a more stringent end-user and end-use review shall be implemented for the export of graphite dual-use items to the United States. Organizations and individuals from any country or region that transfer or provide relevant dual-use items originating in China to the U.S. in violation of the above provisions will be investigated for legal responsibility in accordance with the law.”[1] The three short sentences reflect China’s attitude and means of using export control as a legal tool to counteract relevant U.S. legislation and enforcement. In particular, the extraterritorial effect of the last sentence will have a direct impact on enterprises abroad. The MOFCOM’s Circular No. 1, dated January 2, 2025, is again about export controls, and it adds General Dynamics and 28 other U.S. entities to the Export Control List for the export of dual-use items. The export of dual-use items to these 28 United States entities is prohibited; ongoing related export activities should cease immediately.[2]
It goes without saying that for EU enterprises, their subsidiaries established in China need to comply with China’s export control laws. Even for EU enterprises as foreign enterprises themselves, because of the extraterritorial effect of the relevant newly enacted Chinese laws, if an EU enterprise resells relevant dual-use items originating in China in Europe or elsewhere in violation of the Chinese laws, theoretically, it will also be subject to liability under the Chinese laws. At this stage, it is not clear what legal measures the relevant Chinese authorities can take to enforce liability. Even so, it is advisable for European companies to pay attention to China’s export control-related announcements in their risk scanning of their export control compliance systems and to take effective precautions against the risk of violating Chinese law. After all, in today’s context of globalization of investment activities and trade supply chains, it is not common to see economic activities that are completely divorced from China, and the possibility of enforcement by Chinese authorities can easily arise.
[1] https://aqygzj.mofcom.gov.cn/flzc/gzjgfxwj/art/2025/art_efbe2d2540e845a59a70f2d0768f671f.html
[2] https://aqygzj.mofcom.gov.cn/flzc/gzjgfxwj/art/2024/art_daaa02c05d8946179dcf5d1ba499ac46.html
