On December 1, 2024, the new Regulation on the Export Control of Dual-Use Goods – 中华人民共和国两用物项出口管制条例 (hereinafter referred to as the “Regulation”), officially published by the State Council of the People’s Republic of China on October 19, 2024, came into effect. This regulatory intervention represents a significant legislative development in China’s export control framework, following the enactment of the Export Control Law on December 1, 2020.
What Are “Dual-Use” Products?
According to Article 2 of the Regulation, dual-use products refer to
“goods, technologies, and services, including relevant technical information and other data, that have both civilian and military applications or contribute to strengthening military capabilities. In particular, they may be used in the design, development, production, or use of weapons of mass destruction and their delivery systems”.
The Regulation on Export Control of Dual-Use Products
In an effort to consolidate existing regulations and strengthen control measures, the Regulation aims to regulate the export of goods, technologies, and services that can be used for both civilian and military purposes, while ensuring national security and protecting technological interests.
The Regulation consists of six chapters, outlining the scope of application of export control laws on dual-use products, specific control measures, such as licensing, end-use management, lists of entities subject to restrictions, supervision, inspections, and legal responsibilities for violation of the law.
Key updates
The main new provisions introduced by the Regulation can be summarized as follows:
Extraterritorial application of export control from PRC
The Regulation applies not only to Chinese entities but also to foreign organizations and individuals who supply or transfer the following goods, technologies, or services to specific countries, regions, organizations, or individuals:
- Dual-use items manufactured outside of China that contain, integrate, or mix specific dual-use items originating from China;
- Dual-use items manufactured outside of China using specific Chinese-origin technologies or other dual-use items;
- Specific dual-use products originating from China.
Licensing system for the export of dual-use products
A mandatory export licensing system has been established to ensure that only authorized entities meeting regulatory standards can export dual-use goods. The licensing framework includes:
- Individual licenses: requested for exports requiring a detailed review of each transaction. These are issued for a specific export of a particular dual-use item.
- General licenses: it may be granted for categories of dual-use exports, under certain conditions, without the need to apply for an individual license for each export. This simplifies the process for companies regularly exporting similar goods.
- Export certificates through information registration: in some cases, specified by the Regulation, dual-use products can be exported after obtaining a certificate by registering export details before each transaction. This is a simplified option for the temporary export of dual-use items (e.g., for exhibitions, repairs, or maintenance abroad).
“Control List” and “Watch List”
With regard to end-user management, the Regulation mentions two types of lists of restricted parties, providing for the adoption of a system of “watch list” and “control list” to monitor entities and transactions that could pose a risk to national security. Those on the “watch list” may face restrictions on obtaining licenses for the export of dual-use goods, while those on the “control list” could be completely banned from purchasing these items from China.
Conclusion
China’s new export control regulation on dual-use goods represents a significant step towards enhancing national security and protecting sensitive technologies.
Companies, including foreign ones doing business in China, shall prepare for significant challenges to ensure compliance with the new rules. These measures introduce stricter export controls and greater scrutiny of recipients.
To successfully navigate this evolving regulatory landscape, companies should pay close attention to compliance management, document handling, and end-user verification.
China Desk – Zunarelli Law Firm
