I. Background: New Trade Frictions in 2026

Since late July 2026, EU-China economic and trade relations have entered a new round of frictions. On July 23, the EU formally approved a new round of sanctions related to the Russia-Ukraine conflict. Under EU Council Regulation No. 2026/1848, fourteen companies headquartered in mainland China and Hong Kong were added to the sanctions list. Brussels stated that these companies had supplied dual-use items—products with both civilian and military applications—to Russia’s military-industrial complex. On July 24, mainland China responded within one day, issuing Announcement No. 30 of 2026 by the Ministry of Commerce, which placed fourteen European entities on its export control list.

The companies placed on China’s list are almost a microcosm of Europe’s industrial landscape. Most of these companies operate in sectors that China regards as strategically sensitive, including defense, aerospace, drones, optoelectronics, semiconductors, and maritime technology. Completely different from previous tariff disputes over anti-dumping and anti-subsidy measures, the extraterritorial effect of China’s export control measures this time means that no organization or individual anywhere in the world may transfer or provide dual-use items originating in the People’s Republic of China to the listed entities. For multinational enterprises that have supply chains, procurement channels, R&D activities, or investment projects in China, this legal consequence is no longer merely a trade compliance issue, but a strategic-level matter directly involving supply chain security, contract performance, investment decisions, and the group’s global reputation.

This article aims to provide a practical overview of legal relief pathways and guidance on building compliance systems for multinational enterprises facing the risk of being listed or already listed.

II. Analysis: Characteristics of Recent Trade Frictions

In fact, this round of sanctions and countermeasures is not the first between the EU and China. On April 23, 2026, in its previous sanctions package, the EU Council had already placed seven Chinese companies on its sanctions list, and the following day, China placed seven EU companies under export controls. The recent frequent sanctions-countermeasure frictions indicate that EU-China trade relations are rapidly becoming more complex. Compared with previous disputes between the two sides over anti-dumping, anti-subsidy, or tariffs on single products, the 2026 EU-China trade frictions show a notable characteristic: the disputes have shifted from product trade to specific companies and supply chains.

In the past, more common trade disputes often took the form of each side imposing additional tariffs, restricting market access, and other measures on specific product categories. For example, in July 2024, the EU determined that Chinese-made electric vehicles had received unfair state subsidies and imposed provisional tariffs of up to nearly 38 percent on them, while China immediately stated that it would launch anti-dumping investigations into European brandy and pork products.

However, the countermeasures announced by the Ministry of Commerce in April and July 2026 explicitly state that “foreign organizations and individuals are prohibited from transferring or providing dual-use items originating in the People’s Republic of China to the above-mentioned entities.” This clearly indicates that such measures target specific entities and their supply chains, and have extraterritorial effect. This means that companies anywhere in the world are prohibited from transferring dual-use items of Chinese origin to the European companies on the list. It is evident that the focus of the disputes has shifted from specific products to specific companies and their supply chains.

It is worth noting that China’s extraterritorial jurisdiction over export controls did not begin today. After the Regulations on the Export Control of Dual-Use Items took effect at the end of 2024, China gradually solidified its extraterritorial control over supply chains characterized by “penetrating verification.” In 2025, the Ministry of Commerce’s Announcements No. 61 and No. 62 extended controls on rare earth items and related technologies to extraterritorial scope for the first time, formally activating Article 49 of the Regulations on the Export Control of Dual-Use Items, and introducing the “50% penetration rule” for the control list and the watch list. The “15th Five-Year Plan” outline released in March 2026 further explicitly proposed “improving the export control system,” elevating it to a national top-level strategy.

Since 2026, China’s export control and anti-sanctions system has shifted from “passive response and case-by-case handling” to a systematic, rapid-response regulatory model. A series of new regulations introduced in the first half of the year—covering export licensing, anti-sanctions lists, blocking orders, countermeasures against extraterritorial jurisdiction, and supply chain security—have woven an interconnected institutional framework. For enterprises, being placed on the export control list is by no means an isolated risk; it may also trigger overlapping consequences under the anti-sanctions list, the unreliable entity list, or even the malicious entity list, creating a “cumulative effect” of multiple legal risks.

III. What Companies Can Do: Relief Paths and Compliance Responses for European-Invested Enterprises in China

For European companies that have supply chains, procurement channels, R&D activities, or investment projects in China, an increasingly practical question is: if a company is placed on China’s export control list, are there legally available relief pathways, and are there preventive measures from a compliance perspective? It should first be noted that being placed on China’s export control list does not prohibit the company from operating in China; the direct legal consequences are mainly focused on transactions involving dual-use items and related transfers or provisions.

Analyzing the applicable laws and regulations, namely the Export Control Law of the People’s Republic of China and the Regulations on the Export Control of Dual-Use Items of the People’s Republic of China, companies that are listed or at risk of being listed should respond from the following perspectives:

Assess and verify the scope of dual-use items in their own supply chains

Companies should first assess and verify which products, technologies, software, services, and supply chain links in their own supply chains actually fall within the scope of China’s export control measures. According to Article 2 of the Regulations on the Export Control of Dual-Use Items, the definition of dual-use items is relatively broad. Therefore, in the assessment and verification process, it is undoubtedly necessary for legal professionals and technical experts to participate jointly and to maintain close communication with regulatory authorities.

In addition, companies should review clause by clause their contracts involving direct or indirect business dealings with the 14 listed EU entities, and assess whether they can invoke relevant clauses to suspend or terminate performance obligations.

Relief pathways after being placed on the export control list

Under China’s current institutional framework, there are case-by-case licensing mechanisms under special circumstances and mechanisms for removal from the control list.

Based on a comprehensive analysis of Articles 28 to 30 of the Regulations on the Export Control of Dual-Use Items, in the short term, companies should seek assistance from their cooperative exporters, who can demonstrate to the competent authorities that the transaction is genuinely necessary, in order to apply for short-term, provisional approvals. In the long term, companies need to cooperate with investigations, make truthful representations, and demonstrate to the competent authorities that the reasons for their listing have been eliminated, and on that basis apply for removal from the control list.

In this process, the first step is to analyze the specific reasons for their listing. From the reasons enumerated in Article 28, the core issue is to prove that the end-user and end-use of the dual-use items do not harm national security or interests. This process is highly dependent on facts, documentation, compliance measures, and communication with regulatory authorities.

Application pathway for case-by-case licensing: According to Article 28 of the Regulations on the Export Control of Dual-Use Items, if an importer or end-user on the control list genuinely needs to export dual-use items under special circumstances, the export operator may apply to the Ministry of Commerce for a single license. From a practical perspective, the core threshold for this application is to prove that the end-user and end-use of the dual-use items do not involve harm to China’s national security or interests.

Long-term pathway for removal from the control list: According to Article 18 of the Export Control Law and Article 30 of the Regulations on the Export Control of Dual-Use Items, if an importer or end-user on the control list, after taking measures, no longer meets the criteria for being listed, it may actively communicate with government authorities and apply to the Ministry of Commerce for removal from the control list. The Ministry of Commerce may decide to remove it based on the actual circumstances.

Compliance responses from a corporate perspective

From a corporate compliance perspective, in order to avoid the adverse consequences of being listed as much as possible, supply chain security assessments and the preparation of pre-emptive documentation to demonstrate the compliance of the dual-use items involved should be put on the agenda.

To mitigate the adverse effects after being listed, companies should make advance arrangements from three dimensions: supply chain resilience, compliance evidence systems, and government communication mechanisms.

Supply chain resilience building: Listed companies are unlikely to obtain a large number of provisional export licenses in a short period of time—the granting of such licenses depends not only on the willingness and professionalism of the Chinese exporter, but also runs counter to the regulatory intent of the listing measures. Therefore, companies must conduct a comprehensive assessment of their dependence on dual-use items in the supply chain in advance, and reserve flexible room for alternative procurement or capacity transfer to prevent supply disruption risks.

Compliance evidence system construction: If a company seeks to ultimately be removed from the control list, merely making a principled compliance commitment is far from sufficient to meet regulatory requirements. Companies must establish a comprehensive compliance evidence system in advance, including but not limited to: (1) accurately identifying business links directly related to the reasons for listing; (2) establishing end-user and end-use management systems; (3) building transaction party and third-party screening mechanisms; and (4) preparing supporting documents that can demonstrate that the risks have been eliminated. The above efforts ultimately serve the statutory criterion of “the reasons for listing have been eliminated” as stipulated in Article 30 of the Regulations on the Export Control of Dual-Use Items.

Proactive communication with government regulatory authorities: Companies should adopt differentiated communication strategies according to different stages:

Proactive consultation in advance: If there is doubt as to whether certain items fall within the scope of dual-use item controls, companies may consult the Ministry of Commerce and obtain an official reply letter as a compliance basis, which can also serve as evidence that the company has fulfilled its duty of due diligence.

Cooperation with investigations and remediation during the process: After being listed, companies should initiate internal reviews immediately. Articles 25 and 30 of the Regulations on the Export Control of Dual-Use Items respectively provide for the obligation to proactively report and the obligation to cooperate with investigations. Companies must actively communicate, make truthful representations, and proactively eliminate harmful consequences within the framework of statutory obligations—this is a necessary prerequisite for subsequent applications for removal. If a regulatory interview or warning letter is received, companies should immediately engage professional legal counsel and make timely written responses and remediation commitments.

Formal application for removal afterwards: After remediation is completed, companies may formally submit an application for removal to the Ministry of Commerce in accordance with Article 18 of the Export Control Law and Article 30 of the Regulations on the Export Control of Dual-Use Items, systematically presenting all facts and evidence demonstrating that the reasons for listing have been eliminated.

Routine regular liaison: Companies should designate a dedicated person as the export control compliance liaison, regularly follow policy updates issued by the security and control authorities of the Ministry of Commerce, actively participate in government-enterprise exchange activities, and upgrade emergency communication to a routine mechanism.

The escalation of EU-China trade frictions in 2026 demonstrates that China’s export controls are no longer merely a trade compliance issue, but are gradually becoming a challenge involving investment, supply chains, contracts, and group compliance. As EU-China economic and trade relations enter a new phase of “sanctions and countermeasures,” for multinational enterprises with supply chains, procurement channels, or R&D activities in China, this directly implicates strategic-level issues of supply chain security, contract performance, investment decisions, and the group’s global reputation. What companies truly need is not to judge whether risks will materialize, but to ensure that when risks do occur, they have already established business and compliance systems that can withstand regulatory scrutiny, and still have legal options available to take action.