China Resolute on Imposing Export Controls to Dual-Use Items

China accelerates effort to impose export controls to products that can have military applications. Beijing will require exporters of such products to provide documentation of the intended use by the buyers in an effort to halt the militarization of sensitive technology. However, concerns remain that Beijing could use the process arbitrarily against countries that it has poor diplomatic relations.

Last month, China’s Ministry of Commerce solicited regulations on export control of dual-use items after more than a year since the country enacted the Export Control Law in December 2020. The law authorizes the government to take action against any country that abuses export control measures and poses a threat to China’s national security.

The new regulations emphasize that the dual-use items, products that both have civil and military use, should follow the national security concept.

The targeted items particularly involve those that can be used in the development of weapons of mass destruction.

The government intends to implement control lists and export licenses while supervising and inspecting the exports in accordance with the law.

The validity period of a general license should be not longer than two years, which will be followed with a reassessment before the expiration.

Not all related items will be prohibited from export.

In response to the unauthorized export of dual-use items, the new regulations further clarify the degree of punishment, including the confiscation of illegal gains.

If the illegal business volume is more than 500,000 yuan ($77,000), a fine of five to 10 times the illegal business volume shall be imposed concurrently. If the amount of illegal business volume is less than 500,000 yuan, a fine of not less than 500,000 yuan but not more than 5 million yuan shall be imposed.

Before the Export Control Law (ECL) took effect, export controls were scattered across several laws and regulations and lacked a unified regulatory system. The ECL establishes the regulatory framework for export control and defines the controlled items subject to export control. For foreign companies, specifically engaged in import and export trade or related business, the ECL may require changes to export licenses, administration, and procedures.

Other than dual-use items; military products including equipment, special production facilities and other related goods, technologies, and services utilized for military purposes as well as nuclear materials, including nuclear equipment, non-nuclear materials used for nuclear reactors, and related technologies and services are also included in the ECL.

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