China export controls

China's export control law: What latest draft changes mean for traders

What is the status quo of the new China export control law and how can traders prepare for it? Get the official news and expert recommendations.

Progress of China's export control law

As reported by AEB global trade expert Olga Pramberger, the latest status of the draft law on export controls was submitted to China’s National People's Congress and its Standing Committee for deliberation at the end of last year. Feedback on this current draft law was encouraged and the wider public had until January 26, 2020 to submit their comments.  

China’s new export control law imposes prohibitive and/or restrictive measures on the export of specific goods and commodities. This includes nuclear and biological materials as well as weapons and associated items. The goal of this new export control law meets two objectives: 

  1. Strengthening China’s national security
  2. Aligning more with international standards for non-proliferation 

The new draft law on export controls is based on existing administrative regulations and it was first released in 2017. You can read more about the background of China’s first dedicated law specifically addressing export controls in our previous article

But this latest draft of the new export control law features various key changes to the original one released by the Chinese authorities in 2017. Some of these key changes are highlighted in the following chapter, as reported by Global Compliance News in January.

What does this mean for traders?

There is currently no set timeframe for the new China export control law to take effect. But drafts of law presented to the China’s National People's Congress usually undergo three rounds of deliberation. The new export control law has already passed the first and the other two are expected within the next few months.

Export control experts also expect further implementing regulations to be issued over time including but not limited to control lists, license facilitation measures, recordkeeping requirements, and internal compliance programs.

Key takeaway 

It’s something to get ready for. No business can afford violations of export control laws by any regime across the globe. Compliance with new laws such as this one (once in effect) is required from day one. And automated export control solutions are vital to efficiently manage compliance and secure trade. 

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China’s export control law draft: Key changes

Retaliatory measures

This provision has been removed. It is currently not clear whether the “Unreliable Entity List” that was announced by MOFCOM in May 2019, would be, if implemented, integrated into the export control legislation or would be enacted independently. You can read more about China’s plans for this new unreliable entity list in our previous article

Re-export

The definition of “re-export” based on de minimis calculations has been removed. But reference to “re-export” is still included with regards to trans-shipment and transit activities. You can learn more about “de minimis” in our export control FAQ

Catch-all

The catch-all provision with reference to several unlisted items has been clarified. It is now defined to cover items that may be used in the design, development, production, or use of weapons of mass destruction and their means of delivery, or used for nuclear, biological, or chemical terrorist purposes.

Determination by authorities

An exporter may submit an official request to determine whether an item is subject to control under the export control law. The latest version of the draft law now clarifies that this includes technologies and services, and it now requires the authorities to respond in a timely manner – though a specific timeline is not specified. 

End-use / end-user statement (EUS)

The submission of an EUS as supporting document for an export permit application is now mandatory. The new draft law also features a revision in the approval and notification process when changing the end-user or end-use: Previously responsibility of the importer, it is now the responsibility of the end-user to obtain approval from the authorities – and the prompt reporting duty to the authorities in case of such changes now applies to both, the importer and exporter. 

Permit application timeline

The application timeline for dual-use items is limited to 45 days and subject to possible extension due to special circumstances. This possible extension has now been clarified as an additional 15-day period.

Increased penalties

The new China draft export control law features significantly increased penalties for several offences and new categories of offences are introduced. The provision with reference to penalty mitigation in the case of voluntary disclosure has been removed. 

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