China's "New" Export Control Law

China globe

On 17 October 2020, the Standing Committee of China’s National People’s Congress (SCNPC) passed the Export Control Law of the People’s Republic of China (the “ECL”) and the same entered into force on 1st December 2020. The ECL comprises 5 chapters and 49 article.

The initial draft of the ECL was issued by the Ministry of Commerce of China for public comments in 2017, and it was finally passed into law after three revisions. The passage into law of the ECL marks a significant step by the Chinese government towards the establishment of the first comprehensive and unified export control regime restricting exports of military and dual-use products, technology and services for the purpose of safeguarding China’s national security and interests. This legislation provides the underlying legal basis for existing and future secondary regulations and other implementation rules in this area.

Scope of applicability

Under the ECL, “export controls” is defined as restrictions on “transfer of Controlled Items from the territory of the People’s Republic of China to overseas” and “the provision of Controlled Items by any citizen or incorporated or non-incorporated organization of the People’s Republic of China to any foreign organization or individual”.

Four categories of “Controlled items” are set forth in Article 2 of the ECL:

(a) dual-use items that can be used for both civil and military purposes;
(b) military items;
(c) nuclear items; and
(d) other goods, technologies, services and items that are vital to the maintenance of China’s national security and interests, and performance of anti-proliferation and other international   obligations.

Controlled items also include technical data for any of the above.

In addition, according to Article 45, the ECL applies to “the transit, transshipment, through transportation, re-export, or the export of Controlled Items from any bonded areas, export processing zones or other special customs supervision zones or export supervised warehouses, bonded logistics centres or other bonded supervision premises to overseas.”

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

Furthermore, the ECL specifically prohibits any person or organization from providing any agency, freight and delivery services, financial services, services related to customs declaration, third-party e-commerce trading platform and other services to exporters engaged in illegal export activities.

Export control measures, lists and licensing

The ECL authorizes the State Council and the Central Military Commission (collectively the “State Export Control Administrative Departments” or SECADs) to perform the following export control functions:

  • Export control lists and temporarily controlled items. Article 9 provides that the SECADs shall establish and publish export control lists for export of Controlled Items. At the time of writing, there are 25 lists of Controlled Items published between 2002 and 2018 on the website of the Ministry of Commerce (“MOFCOM”). No new list has yet been published since the ECL entered into force.

    In addition, any unlisted goods, technologies or services may be temporarily controlled for up to two years following announcements made by the SECADs. When this period has elapsed, the temporary restrictions may be removed, extended or changed to permanent ones, depending on the results of an assessment conducted by the relevant government authorities.
  • Qualification. Under Article 11, exporters in the business of exporting Controlled Items shall obtain the corresponding export qualifications in accordance with the ECL.

  • Licensing. Article 12 states that, in order to export any Controlled Items on an export control list or any temporarily controlled items, exporters shall apply to SECADs for a license. In addition, for the export of any goods, technologies or services that are not Controlled Items on the export control lists or the lists of items subject to temporary control but which may nevertheless have any of the following risks, of which an export operator knows or ought to know, or is notified of by the SECADs, the export operator shall apply to the SECADs for a license;

1. endangering the national security and interests;
2. being used for the design, development, production or use of weapons of mass destruction and their delivery vehicles; or
3. being used for terrorist purposes

Article 13 provides that SECADs will take all of the following factors into account in reviewing an export operator’s application for the export of Controlled Items, and make an approval or non-approval decision:

  • national security and interests;
  • international obligations and commitments;
  • type of export;
  • sensitivity of the Controlled Items;
  • destination country or region of the export;
  • end users and end use;
  • credit record of the export operator; and
  • other factors as prescribed in laws or administrative regulations.
  • Compliance system. The ECL does not impose a mandatory requirement on exporters to establish an internal compliance system. However, under Article 14, if an export operator establishes an internal compliance system for export control compliance, and the system works well, the SECADs may grant facilitation measures such as a general license for the export of the related Controlled Items by such export operator. The Specific measures will be provided by the SECADS. Meanwhile, according to Article 5 section 4, the SECADs will issue guidance at appropriate times on establishing sound export control internal compliance systems and proper operation.

  • End user and End user control. Articles 16 and 17 stipulate that exporters shall submit relevant documents and information proving the end user and end use to SECADs and the SECADs shall establish a risk management system for end users and end uses of Controlled Items.

  • Blacklists. Under Article 18 of the ECL, SECADs shall establish controlled party lists (the “Blacklists”) including importers and end users that:

1. violate the requirements regarding the management of end users and end uses;
2. may endanger the national security and interests; or
3. use Controlled Items for terrorist purposes.

Exporters are prohibited to enter into any transactions with any importer or end user on the Blacklists. However, If an export operator has a true need to enter into a transaction with an importer or end user on the restricted list, it can submit an application to the SECADs. Meanwhile, an importer or end user on the Blacklists may submit an application to the SECADs for removing them from the Blacklists if any of the circumstances described above no longer exists.

  • Embargo. In accordance with Article 10, SECADs may restrict or prohibit the export of any Controlled Items to any specified destination country or region or to any specified organization or individual as required for the maintenance of national security and interests and the performance of anti-proliferation and other international obligations.


Any individual or entities violating the ECL will be subject to administrative penalties and criminal penalties, including but not limited to warnings, confiscation of products, fines, cancellation of an export license and imprisonment. Any person who receives a criminal penalty for export control violations may be subject to a lifetime ban from export activities.

In addition, an exporter that has been penalised under the ECL may be denied the right to apply for export licences for five years commencing from the date the penalty decision becomes effective. Management personnel directly responsible for such violation or any other directly responsible persons may be prohibited from engaging in relevant export activities during the same five year period. ECL violations will also be recorded in the social credit records of the penalised exporters, which may seriously hinder their business operations in China and internationally. Furthermore, the ECL specifies that if a violation of the ECL further endangers the national security and interests of China, the offenders may face penalties under other laws, potentially including the National Security Law of the PRC.

International countermeasures

Article 48 of the ECL, as one of the key clauses, provides that if any foreign country or region abuses export control measures to jeopardise the national security and national interests of China, the Chinese government may, based on the actual situation, take “equivalent” countermeasures against such foreign country or region.

Impact of the ECL on shipping

The ECL, with its broad coverage, strengthened controls, and extraterritorial application, will likely have an impact on entities such as shipowners, operators and charterers that are involved in the transportation of goods, especially in the Controlled List, into and from China.

Article 36 of the ECL provides that any person who knowingly facilitates violations of this law by providing agency, shipping, delivery, customs clearance, third-party e-commerce trading platform, financial and other services for any exporter can be subject to penalties under the ECL.  Members’ attention is drawn to the following articles which potentially have an impact on shipping:

  • Article 20 No organizations or individuals shall provide any agency, shipping, delivery, customs clearance, third-party e-commerce trading platform and financial services for any export operator engaging in any export control violations.
  • Article 26 An export operator of military items shall engage an approved carrier for the export of military items to perform the transport and other services for the export of military items. The specific measures shall be provided by the State’s administrative department for the export control over military items by working with the related departments.
  • Article 28(4) Checking the delivery vehicles used for the export, preventing the loading of suspicious export items, and ordering the withdrawing of illegally exported items;
  • Article 36 If any person provides any agency, shipping, delivery, customs clearance, third-party e-commerce trading platform, financial, and other services for any export operator in the circumstances of knowing such operator’s engagement in export control violations, [the authorities shall] issue a warning, order that the violation be stopped, confiscate any illegal income, and impose a fine that is greater than three times of and smaller than five times of the illegal turnover if the illegal turnover is more than RMB 100,000, or a fine that is greater than RMB 100,000 and smaller than RMB 500,000 if there is no illegal turnover or the illegal turnover is less than RMB 100,000.
  • Article 45 The transit, transshipment and through shipment, re-export of any Controlled Items or the export of any Controlled Items from bonded areas, export processing zones and other areas specially regulated by the customs and regulated bonded places such as regulated export warehouses and bonded logistics centres shall be governed by the applicable provisions of this Law.

Meredith Yang