China’s Export Control Law Explained

Posted by Written by Sofia Baruzzi Reading Time: 7 minutes

China’s Export Control Law is the first comprehensive export control legislation put out by Beijing. Starting December 1, 2020, it will regulate the export of sensitive materials and technologies from China to overseas, obliging both, Chinese exporters and foreign customers, to carefully review their compliance to Beijing’s export control policy or be liable to get penalized.

China’s Export Control Law (“ECL”), which comes into effect December 1, this year, will tighten up the country’s export’s supervision regime through strict monitoring and imposition of penalties.

The ECL includes five chapters covering general provisions, control policies, control lists and control measures, regulations, legal liabilities, and supplementary provisions – with a total of 49 articles.

The ECL also extends Chinese jurisdiction even beyond the national territory, by providing penalties and obligations binding on importers, end-users, and, more generally, by subjecting organizations and individuals located outside of the territory of the People’s Republic of China to its export control provisions.

On October 17, 2020, the National People’s Congress Standing Committee passed the ECL to unify the pre-existing legal framework composed of several regulations, with the aim of fulfilling international obligations, safeguarding national security and national interests, and enhancing export control by introducing restrictions on the export of specific items.

What items are subject to China’s Export Control Law?

Controlled items

The ECL applies to the so-called “controlled items” and to the technical information and data related to such items. More specifically, under the ECL – the notion of controlled items includes dual-use items, military items, nuclear items, technologies, services and items related to the maintenance of national security and national interests and to the performance of anti-proliferation, among others.

Control lists and temporary controls

The controlled items mentioned above should not be seen as an exhaustive list of the items covered under the ECL restrictions. Indeed, such measures shall also be applied to further items indicated under control lists, directories, and catalogues to be issued by the departments of the State Council and the Central Military Commission (“State Export Control Administrative Departments” or SECADs) from time to time.

In addition, the SECADs shall also exercise temporary control over goods, technologies, and services not mentioned under the export control lists and shall enforce this control for a period of two years before determining whether or not to list such items on a control list.

Unlisted items

Beyond the controlled items mentioned above and the items subject to temporary controls, there is another category of items that are subject to ECL restrictions – those goods, technologies, or services that:

  • may endanger the national security or national interests;
  • may be used for designing, developing, producing, or using weapons of mass destruction; or
  • may be used for terrorism purposes.

With reference to the export of these unlisted items, controlled items, and items subject to temporary control, the ECL provides that export operators shall apply to the SECADs for a license.

The SECADs shall approve, or not, the export of the items based on their assessment of the following:

  • National security and national interests;
  • International obligations and commitments;
  • Type of export;
  • Sensitivity of the items;
  • Destination country or region of the export;
  • End-users and end-use;
  • Credit record of the export operator; and
  • Other factors under the applicable laws and administrative regulations.

How are exports regulated under the ECL?

The ECL provides that the State shall exercise export control over the export of the above-mentioned items, meaning that the State shall apply prohibitive or restrictive measures on transfers of controlled items from China to overseas, and on provisions 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.

Furthermore, under the ECL, the State will also control the transit, trans-shipment through transportation, re-export of controlled items, or the export of controlled items from bonded areas, export processing zones, other areas subject to special customs supervision zones, and regulated bonded places, such as regulated export warehouses and bonded logistics centers.

Who is affected by the ECL provisions?

The ECL imposes obligations not only on exporters located in China, but also on end-users and importers who have specific duties under this law and may be subject to heavy restrictions.

End-users and end-use

When applying for the license, the export operators shall submit documents certifying end-users and end-use of the items. In this regard, the ECL states that end-users shall undertake not to alter the end-use of the items, nor assign them to any third-party without the approval of the SECADs, and if an export operator or importer becomes aware of any possible change of the end-users or end-use – they should immediately report to the SECADs.

Importers and end-users

The ECL provides that the SECADs shall issue a restricted list mentioning the importers and end-users that:

  • violate the requirements regarding the management of end-users and end-uses;
  • may endanger national security or national interests; or
  • use controlled items for terrorist purposes.

Against those mentioned under this list, the SECADs can either prohibit or restrict deals regarding the export of the controlled items, suspend the export of such items, and withhold export licensing facilitation measures.

Besides this, the ECL also provides that export operators shall not enter any transactions with importers or end-users included in the restricted list. However, if an export operator has a true need to enter a transaction with one of them, it can submit an application to the SECADs.

Interestingly, according to the ECL, importers and end-users can apply to SECADs asking to be removed from the list, if the circumstances that initially justified the inclusion under the list have been eliminated.


It is worth noting that the ECL expressively provides that any organization or individual – outside of the territory of the People’s Republic of China – that violates the provisions of the ECL in relation to the administration of export control, endangers China’s national security and national interests, and hinders the performance of non-proliferation and other international obligations, shall be subject to investigation and legal liability in accordance with the ECL.

What are the penalties for export controls’ violations?

Investigations and related penalties

The SECADs have strong investigative power and, in case of any suspected export control violation, may take the several measures ranging from on-site inspections, interviews, duplicating documents, inspecting means of transport used for export, confiscation and seizure of items, and bank-account examinations.

The export operator who refuses or obstructs any regulatory inspection, can receive a warning, but can be also punished with a fine ranging from RMB 100,000 (about US$ 15.109) to RMB 300,000 (about US$ 45.328).

Serious violations

When an export control violation occurs, the imposed penalties may consist of warnings, orders to suspend the illicit behaviour, confiscation of the illegal income, and fines, the amount of which depends on the offense and on the amount of illegal income.

In case of serious violations – such as unlicensed exportation of controlled items without obtaining the qualification for export operations, exporting controlled items without approval, exporting controlled items beyond the approved scope specified in the export license, or exporting controlled items that are prohibited from being exported,  or engaging in unlicensed transactions with importers or end-users listed under the restricted list – a fine of up to RMB 5 million (about US$ 755.857) or 10 times the gains made from the illegal activities may be imposed, together with business suspension and revocation of export business qualification.

Other violations

With reference to other violations, such as fraud and bribery, the authorities shall withdraw the approval and revoke the export license, confiscate any illegal income, and impose a fine that is greater than five times and smaller than 10 times the illegal turnover – if the illegal turnover is more than RMB 200,000 (about US$ 30.218). If there is no illegal turnover or the illegal turnover is less than RMB 200,000, a fine ranging from RMB 200,000 to RMB 2 million (about US$ 302.343), shall be imposed.

In case of forgery, falsification, purchase, or sale involving export licenses, the fine that may be imposed will be greater than five times and smaller than 10 times the illegal turnover – if the illegal turnover is more than RMB 50,000 (about US$ 7.554). If there is no illegal turnover or the illegal turnover is less than RMB 50,000, a fine ranging from RMB 50,000 to RMB 500,000 (about US$ 75.546) shall be imposed.

Third-parties’ liabilities and related penalties

The ECL also foresees that any third-party that provides agency, shipping, delivery, customs clearance, third-party e-commerce trading platform, financial, and other services to any export operator, knowing such operator engages in export control violations, they shall be sanctioned with warnings, orders to stop the illicit conduct, confiscation of illegal income, and a fine greater than three times of and smaller than five times of the illegal turnover – if the illegal turnover is more than RMB 100,000 (about US$ 15.109). If there is no illegal turnover or the illegal turnover is less than RMB 100,000, a fine ranging from RMB 100,000 to RMB 500,000 (about US$ 75.546) shall be imposed.

Additional penalties

The ECL states that for a period of five years from the date of the punishment, the SECADs will not accept any export license application made by the punished exporter and will not allow any person responsible for the violation to engage in relevant exporting activities.

Notably, it is also provided that where the export control violation constitutes crime, criminal penalties shall also apply, and any person who is subject to criminal penalty for export violation shall not engage in export activities over their lifetime.

How to interpret the ECL in the international context?

The ECL has been adopted by the Chinese government in order to establish a uniform framework of rules disciplining the export of specific items, ensuring that the scope of the said measures is equal and balanced with the export control policies adopted by the other countries, and with the ultimate purpose of safeguarding China’s national security and interests.

Even though the ECL does not target any specific country, it clearly states that “if any country or region abuses export control measures to endanger the national security and national interests of the People’s Republic of China, the People’s Republic of China may, based on the actual situation, take reciprocal measures against that country or region”.

This provision reveals the Chinese government’s intention to adopt any measure deemed appropriate to respond to export restrictions set by other countries towards China.

With this perspective, the ECL appears to be setting the legal ground for Chinese authorities to fight back against the export control regime recently adopted by the US, which has targeted leading Chinese companies, such as Huawei Technologies Co., the Semiconductor Manufacturing International Corp., etc.

It is worth noting that a first step in this direction was already taken in August this year, when China amended the Catalogue of technologies prohibited or restricted from export by adding among the restricted items, speech recognition and recommendation technology – thereby giving the Chinese government the opportunity to intervene in the sale of TikTok’s US operation.

On the other hand, the EU is finalizing a plan concerning the export control on technologies, including dual-use technologies, under which companies will be required to obtain a license to sell such products abroad. Hence, China’s Export Control Law appears, again, as a means through which China can safeguard its interests and ensure reciprocity against other countries’ export control policies.

Thus, to assess the impact of the ECL at the international level, it will be necessary to monitor the relationships among China, US, and EU, as well as other countries since it is already clear that the ECL scope covers enterprises (and individuals) located both in China and abroad.

Hence, companies must carefully evaluate their compliance with the law and, in case it is required, adjust their businesses accordingly.

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