China adopts new export control law

published on 4 November 2020 | reading time approx. 2 minutes

On 17 October 2020, the Standing Committee of the National People's Congress passed the Export Control Law, which will already come into force on 1 December 2020. This is the first law in China concerning export control. Previously, there were already export control regulations, which, however, had no statutory status.

Scope of export control

Export controls apply to goods, technologies and services as well as related technical data, documentation, etc. in the areas of military and nuclear products and dual-use goods.

It should be noted that export controls do not only apply to the transfer of goods subject to control from China to other countries. Rather, the delivery of such goods from Chinese persons or organizations to foreign persons or organizations within China is also subject to export control, i.e. cross-border delivery is not required for the application of the law. The competent authority for export control is the State Administration of Export Control ("Supervisory Authority").

Listing of goods affected

The Supervisory Authority will release a list of all goods and services affected by export controls. In addition, the Supervisory Authority will be authorized to temporarily impose export controls on non-listed goods and technologies, however, only for a period not exceeding two years.

In order to export goods and services subject to export control, a corresponding application must be submitted to the Supervisory Authority. The Supervisory Authority may prohibit the export in general or for certain countries and regions or certain foreign persons or organizations.

Listing of organizations and persons

In addition to the list of goods and services affected, the Supervisory Authority will also draw up a list of persons and organizations in respect of which the Supervisory Authority may take specific measures, such as prohibition and/or restriction on trade of goods under control or suspension of exports of goods under control. Noteworthy is, however, that importers and end-users on the control list may apply to the Supervisory Authority for removal, if the circumstances which led to their listing no longer exist.

Prohibitions and penal regulations

The law prohibits any person or organization to provide agency, freight and delivery services, financial services, services related to customs declaration as well as e-commerce trading platform - services to exporters who conduct illegal exports. However, under special circumstances, export operators may file an application to the Supervisory Authority in order to be allowed to transact with blacklisted importers and end-users.

Further, the law reserves the right for China to take appropriate countermeasures against any country or region that violates export control regulations in a way that threatens national security and China's interests.

In contrast to the previous draft, which merely stipulated administrative penalties, the law provides for criminal sanctions for violations of the law, e.g. by exporting prohibited goods or exporting without the appropriate permit.

In addition, the law is also applicable extraterritorially, i.e. if an organization or individual outside China violates the provisions of this law and thereby endangers China's national security and interests and obstructs the fulfillment of international obligations, this person or organization may be held legally liable in China.

Legal implications

Exporters should thoroughly check the list of goods subject to export controls to verify whether their own goods are included. If this is the case, an appropriate export permit should be obtained immediately. This also applies to third parties who provide services to exporters in the course of export. In any case, such service providers should always obtain confirmation from the exporter that the export of the goods in question is not subject to export controls or permitted.

One positive aspect might be that export control authorities shall timely issue industry-specific guidelines to guide export operators in the establishment and improvement of their internal export control compliance systems.

The implementation of the law in practice and the concrete effects and associated recommendations for action remain to be seen.