Caixin Explains: China’s New Export Controls and How They Will Work

China has announced new regulations for exporting dual-use items—goods, technologies, and services that could be used for both civilian and military applications—as tensions with the United States grow over claims that these exports are being exploited for military purposes. The new rules will take effect on December 1 and aim to bolster national security, encourage global non-proliferation cooperation, and standardize export controls on such items. A system requiring exporters to disclose the intended use and final user of the goods will replace the existing registration system to streamline policies. [para. 1][para. 2][para. 3][para. 4]

Recently, two Chinese companies faced U.S. sanctions over allegations of producing drones for Russia in its conflict with Ukraine. Further scrutiny has been applied to Chinese exports amid growing concerns over drone usage by Iran and Russia. In response, China added drone components with potential military applications to a trade blacklist. Regulatory changes are afoot as the nature of dual-use items expands, influenced by technological advancements and complex global supply chains, with experts noting that China's regulatory alignment with international standards could strengthen its control framework. [para. 5][para. 6][para. 7][para. 8]

The regulations target dual-use items that could contribute to weapons development or deployment. Given the potential threat they pose to international security, numerous countries strictly regulate such exports under domestic legislation. Since the 1990s, China has set several regulations, including the 2020 Export Control Law, to control these goods. The new rules aim to consolidate and simplify the fragmented regulations under a single framework. Approximately 694 products, spanning nuclear, biological, missile-related materials, chemicals, and other security-related items, currently fall within these regulatory boundaries. Experts expect the new framework to ease compliance by streamlining these control lists. [para. 9][para. 10][para. 11][para. 12]

The newly introduced permit system and lists for dual-use export regulation aim to improve license management and establish oversight measures. The system will feature a "watch list" and "control list" similar to U.S. mechanisms like the Unverified List and Entity List, which impose warnings, restrictions, or strict limits on transactions involving entities of concern. Presently, 664 Chinese firms, including major tech entities like Huawei, are on the U.S. Entity List, and 55 organizations appear on the Unverified List. This framework mirrors global practices, reflecting China's adaptation to international export control standards. [para. 13][para. 14][para. 15][para. 16][para. 17]

The Ministry of Commerce is developing a unified export control list as part of the new regulations, including various high-tech products, software, and services as potential dual-use items. Rapid growth in fields like commercial encryption, semiconductors, and drones underscores the need for such controls. Sectors like artificial intelligence, quantum computing, and biotechnology are expected focal points as China refines its export control measures. [para. 18][para. 19]

China's evolving regulatory framework includes multiple laws from recent years targeting export governance and foreign sanctions, like the Unreliable Entity List regulations and the Export Control Law. The new regulations provide a legal foundation for managing dual-use items and establish crucial systems for their control, aligning administrative laws to address regulatory gaps and reinforce control efficiency. These measures aim to unify the fragmented export control landscape under a comprehensive legislative framework. [para. 20][para. 21][para. 22]