Understanding China’s export control law: key compliance considerations

As global trade becomes more complex, companies engaging in business with or within China should understand the implications of the Export Control Law of the People’s Republic of China (ECL). Effective since December 1, 2020, the ECL significantly reshaped China’s export control regime, with broad implications for both Chinese and foreign businesses.

The ECL provides a unified legal framework governing the export of controlled items from China. It also applies to transfers by Chinese entities or citizens to foreign individuals or organizations, regardless of where the transfer occurs—a provision that demonstrates its extraterritorial reach.

Controlled items under the ECL include:

• dual-use items (civilian goods with potential military applications)
• military products
• nuclear materials
• biological and chemical items
• commercial encryption technologies and services

The ECL can also cover other goods, technologies, services and technical data related to national security, interests, and international obligations on non-proliferation. The law consolidates and replaces previously fragmented regulations, creating a centralized system for managing sensitive exports.  

1. Extraterritorial jurisdiction

The ECL allows Chinese authorities to impose export controls even outside of China’s borders if the activity affects national security or interests. This poses significant implications for multinational companies engaged in re-export or global supply chain activities involving Chinese-origin items.

2. Controlled items and entity lists

China has established a Unified Control List of items subject to export restrictions. They have also established an Export Control Entity List, identifying foreign importers, end-users, or intermediaries subject to restrictions or bans. Inclusion on this list can result in suspension of exports, mandatory licensing, or outright prohibitions on trade with Chinese exportersii.

3. Catch-all provision

Even if an item is not explicitly listed, it can still be subject to controls if authorities believe it may endanger national security or be used for:

• weapons proliferation
• terrorism
• other activities contrary to China’s interests 

This gives regulators significant discretionary power and can complicate compliance.

4. End-use and end-user verification

Exporters are required to conduct due diligence on the end use and end user of controlled items. Transactions suspected of misuse can be denied or blocked—even if the items are otherwise unregulated.

5. Licensing requirements

Exporters must apply for licenses through designated Chinese authorities. The licensing process considers: 

• national security implications
• international obligations
• exporter and end-user credibility
• the nature and sensitivity of the item

Failure to obtain the necessary license can result in serious legal consequences.

6. Penalties and enforcement

Violations of the ECL can result in:

• large fines (up to ten times the value of the illegal transaction)
• suspension or revocation of business licenses
• criminal charges against individuals
• placement on control or sanctions lists

7. Retaliatory measures

The ECL authorizes countermeasures against foreign governments or entities that impose discriminatory export restrictions on China. This may include export bans, denial of business opportunities, or legal action under Chinese jurisdiction.

Foreign enterprises must carefully assess their exposure to China’s export control system. This is especially important for enterprises that:

• rely on Chinese-origin components or technologies
• have operations, suppliers, or customers in China
• engage in re-export or transshipment involving China