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China: Update on new export control of dual-use items regulation

Date of publication: November 22nd, 2024
Introduction
: In recent years, China has significantly enhanced its export control framework to align with international standards and practices; and they involve prohibitive or restrictive measures to safeguard national security and interests. This article provides further information on China's updated export control regulations, focusing on dual-use items, as well as the implications for businesses engaged in international trade.
China's export control framework:
  1. Export control law 2020
    : Passed by the China’s Standing Committee on 17 October 2020, China's Export Control Law provides a comprehensive legal framework for managing the export of dual-use items, military products, nuclear materials, and other goods and technologies critical to national security.
  2. Decree No. 792 (2024)
    : Issued on September 30, 2024, Decree No. 792 outlines the regulations for controlling the export of dual-use items. This decree becomes effective on December 1, 2024, and serves as a critical update to China's export control regime.
  3. Announcement No. 51 (2024)
    : Released on November 15, 2024, this announcement introduces the updated Export Control List of Dual-Use Items, aligning China's controls with international practices, such as those of the USA, EU, and Wassenaar Arrangement.
China’s export control list structure:
China’s Export Control Classification Number (ECCN) system is structured similarly to international counterparts. The ECCN is a five-digit code where:
  • The first digit refers to the industry.
  • The second digit indicates the type of item.
  • The third digit specifies the reason for control.
  • The fourth and fifth digits are used for series identification.
For example, "3A201" might refer to integrated circuits used in telecommunications with potential dual-use applications.
The Ministry of Commerce (MOFCOM) is responsible for publishing and updating the Dual-Use Items Export Control List, which will be unified and implemented with the new Regulation.
Export control measures for specific destinations
MOFCOM, along with other authorities, may evaluate destination countries' risk levels and impose export control measures based on national security, international obligations and commitments, promoting international cooperation and coordination, opposing the abuse of export control measures and other factors. Specific countries and entities may face export prohibitions with State Council approval.
Licensing requirements
Exporters must obtain licenses for Dual-Use Items on the control list or under temporary control. There are three types of licenses: Individual License, General License, and Export Certificate. Each has specific conditions and validity periods.
Application procedures for licenses
Exporters must submit detailed documentation to apply for licenses, including identification certificates, contracts, technical descriptions, and end-user information. The review period for applications is up to 45 working days.
End-use and end-user requirements
Exporters must apply for licenses if goods may endanger national security, be used for weapons of mass destruction, or terrorism. End users must commit not to alter the use or transfer items without MOFCOM approval.
Legal liabilities and penalties
Violations of the Regulation can result in severe penalties, including fines, confiscation of illegal gains, and suspension of business activities. Criminal liability may also apply under certain circumstances.
Extraterritorial reach
The Regulation, in line with the Export Control Law 2020, extends its reach beyond China. It holds foreign organizations and individuals accountable if they violate export control regulations and jeopardize China's national security, interests, or international obligations. Legal liabilities apply to foreign entities breaching the law. The Regulation also establishes a verification system for end-user/end-use control, allowing overseas on-site inspections. Re-export activities are also controlled under this framework.
Repealed regulations
:
The new China export control regulation and Dual-Use list will come into effect on December 1, 2024. On the same day, 11 announcements, including Announcement No. 5 of 2003 from the Ministry of Commerce and the General Administration of Customs concerning the temporary export control on Tributyl Phosphate (see Annex 2), will be abolished. Furthermore, the Commercial Encryption Export Control List and the associated export licensing procedures for commercial encryption specified in Announcement No. 63 of 2020 by the Ministry of Commerce, the State Cryptography Administration, and the General Administration of Customs will no longer be applicable.
  1. Announcement No. 05 (2003) on Tributyl Phosphate.
  2. Announcement No. 20 (2015) on Dual-Use Unmanned Aerial Vehicles.
  3. Announcement No. 31 (2015) on Some Dual-Use Items.
  4. Announcement No. 28 (2017) on Dredgers.
  5. Announcement No. 46 (2021) on Potassium Perchlorate.
  6. Announcement No. 20 (2022) on High-Pressure Water Cannon Products.
  7. Announcement No. 23 (2023) on Gallium and Germanium Related Items.
  8. Announcement No. 39 (2023) on Graphite Items.
  9. Announcement No. 21 (2024) on Relevant Items.
  10. Announcement No. 31 (2024) on UAVs.
  11. Announcement No. 33 (2024) on Antimony and Other Items.
Conclusion
:
China's updated export control regulations reflect its commitment to safeguarding national security while facilitating international trade. Businesses must stay informed about these changes to ensure compliance and leverage opportunities in the global market.
We are diligently working to incorporate these updates into our ONESOURCE Global Trade Content ECN Solution by December 1, 2024.
Key updates include:
New consolidated control list
: This list covers dual-use items such as nuclear materials, biological agents, chemicals, and missiles.
Export licenses
: We are updating our system to accommodate the new licensing requirements, including individual licenses and general license.
For more information on how ONESOURCE Global Trade solutions can assist you in managing sanctions and export controls, please contact your Account Manager or Client Services Manager.