New Developments in China’s Dual-Use Items Export Legislation

Background Overview

On the evening of October 19, 2024, the State Council officially announced the Regulations of the People’s Republic of China on the Export Control of Dual-Use Items (hereinafter referred to as the “Regulations”), which will take effect on December 1. The Regulations aim to address issues such as the relatively scattered nature of existing laws and insufficient control measures. The issuance of the Regulations establishes a unified and clear regulatory framework and system for dual-use items, providing institutional guidance for import-export operators and related service providers.

 Interpretation of the New Regulations

Definition of Dual-Use Items

Article 2 of the Regulations explicitly defines “dual-use items” as goods, technologies, and services that have both civil and military applications, or that contribute to enhancing military capabilities. This includes items that can be used for the design, development, production, or use of weapons of mass destruction and their delivery systems, as well as related technical data.

The specific scope of dual-use items is currently outlined in documents such as the Catalogue for the Administration of Import and Export Licenses for Dual-Use Items and Technologies, the Control List of Nuclear Dual-Use Items and Related Technologies Export Control, and the Control List of Missiles and Related Items and Technologies Export Control. Article 11 of the Regulations stipulates that the export control list for dual-use items will be formulated, adjusted, and published in coordination with relevant national departments in accordance with prescribed procedures.

Export Activities Subject to the Regulations

Export activities subject to the Regulations refer to the transfer of dual-use items from within China to outside the country, as well as the provision of dual-use items by Chinese citizens, legal entities, and unincorporated organizations to foreign organizations or individuals. This includes trade-related exports as well as transfers through donations, exhibitions, collaborations, aid, or other means. If an enterprise’s exports involve technologies, goods, or services listed in the export control list or covered by temporary control announcements, the enterprise must fulfill the compliance obligations stipulated in the Regulations and apply for an export license from the Ministry of Commerce.

Dual-Use Item Export Licensing System

To determine whether an export requires an export license, enterprises should compare their goods and technologies against the export control list and temporary control announcements. If they are unable to make a determination on their own, they should consult the Ministry of Commerce to avoid potential legal risks.

The Regulations have abolished the registration system for dual-use item export operators, allowing export operators to apply directly for export licenses without prior registration. License types include single-use licenses, general licenses, and reporting information to obtain export credentials.

Furthermore, under Article 13 of the Export Control Law, when reviewing applications for the export of controlled items, the national export control authority will make approval or denial decisions based on considerations such as national security and interests, the sensitivity of the controlled items, and the destination country or region of export. For example, our firm once received an inquiry from a client, a foreign-funded medical device company, that applied for an export license to ship relevant equipment to India. After considering factors such as national security and interests, as well as the destination country, the Ministry of Commerce denied the client’s application. It is worth noting that, under Article 41 of the Export Control Law, the only remedy in such cases is to file for administrative reconsideration.

Legal Advice

In light of the series of impacts brought by the issuance of the Regulations on export controls, enterprises should pay attention to the following aspects:

• If enterprises need to apply for a general license, they must establish an export control compliance management system and ensure its proper operation in accordance with the Regulations.
• Enterprises should choose stable and reliable export channels and verify the authenticity of the end users and intended purposes of the exports.
• Considering that the Regulations explicitly require export operators to properly preserve documents related to the end users and intended purposes of dual-use item exports—such as certificates, contracts, invoices, accounts, records, documents, and business correspondence—for a retention period of no less than five years, enterprises should establish a corresponding document management system.

D’Andrea & Partners Legal Counsel will continue to provide information on investment information in China. If you have any questions related to any business and legal information in general, feel free to contact us at:info@dandreapartners.com.

D’ Andrea & Partners Legal Counsel is a leading international law firm, with our European headquarters situated in Milan, Italy, and our Asia-Pacific headquarters based in Shanghai, China. Our firm has a strong presence across major cities in China. Our firm has a strong presence across major cities in China, India, Italy, UAE, and Vietnam, as well as a Russian-speaking Desk. We are one of the very few international law firms in China duly authorized by the Ministry of Justice of the PRC to operate as a Representative Office of a foreign law firm in China.

Disclaimer

The above content is provided for informational purposes only. The provision of this article does not create a professional mandate between DP Group and the reader and does not constitute legal or financial advice. Professional advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal or financial advice.