China Enacts Export Control Law

China enacted a new export control law to restrict sales of national security-related goods, mirroring steps taken by the U.S. to strengthen restrictions on sensitive exports to China. The law, which was passed by the National People’s Congress Standing Committee Oct. 17 and takes effect Dec. 1, creates an export control regime with control lists, compliance requirements for industry and a list of prohibited importers and end-users, somewhat similar to the U.S.’s Entity List.

The law contains regulations on the management of dual-use items, military goods, government supervision, penalties and other “general provisions” on the regime. China said departments within its State Council and the Central Military Commission are “responsible for export control related work,” according to an unofficial translation, but will establish an “export control mechanism” to coordinate among various agencies on “major issues of export control.”

China said it will create “control lists, directories or catalogs” with items that will require export licenses and plans to issue “guidelines” to help industry “improve internal export control compliance systems.” That will include requirements on adhering to a restricted list of people and entities who violate end-use requirements, “endanger” national security or use controlled items for “terrorist purposes,” China said. Exports to people and entities on the list will be restricted, but certain shipments may be eligible for a license. China also said it will ban “freight, delivery, customs declaration, third-party e-commerce transaction platform, and financial services” to exporters who violate the law.

The law also includes monetary penalties for people and companies who violate the export controls, including fines of “five to ten times the illegal business amount.” If the “illegal business amount” is less than 500,000 yuan, China said it will impose fines of “500,000 yuan to 5 million yuan.”