China is a member of the World Trade Organization (WTO). It participates in WTO plurilateral agreements, including the Trade Facilitation Agreement and the Government Procurement Agreement. China is a full party to the Trade Facilitation Agreement (TFA), which entered into force on 22 February 2021. China is currently negotiating its formal membership in the Government Procurement Agreement. Furthermore, China is a signatory to the updated Information Technology Agreement (ITA), which eliminates tariffs on a range of information technology products.
As of 1 January 2025, China has signed 23 free trade agreements with 30 countries and regions. The following are some of the major ones.
China has enjoyed Generalised System of Preferences (GSP) treatment from most countries since 1978. However, 32 countries including EU member states and the United Kingdom terminated GSP benefits for China on 1 December 2021. Concurrently, China’s General Administration of Customs ceased issuing GSP certificates of origin for exports to these regions. Currently, only Norway, Australia and New Zealand maintain GSP treatment for China.
During the FTA negotiation phase, China actively co-operated with a number of countries and regions to promote trade liberalisation and economic integration. The following are some key developments in the negotiations.
In 2025, China has implemented multiple significant measures in trade policy-related legislation, enforcement and compliance, including the following.
In 2025, China’s trade regulatory activities will be affected by a series of major policies. The following are some key trade regulatory activities.
A major trade policy dispute resolution case in 2025 was the China–EU WTO Dispute Case, a trade dispute between China and the EU within the World Trade Organization framework concerning standard essential patent (SEP) anti-suit injunctions, Case No DS611.
The significant pending changes, hot topics and issues likely to emerge in China’s trade policy over the next 12 months include the following.
China Customs is the national authority responsible for overseeing the entry and exit of goods. In accordance with laws and administrative regulations, China Customs supervises the entry and exit of means of transport, goods, luggage, postal items and other articles; collects customs duties and other taxes and fees; investigates and suppresses smuggling; compiles China Customs statistics; and handles other China Customs affairs.
The General Administration of Customs of China is a ministerial-level agency directly under the State Council. It currently has 21 internal departments, 13 directly affiliated enterprises and institutions in Beijing, two social organisations and 45 units directly under the Chinese Customs. The Central Commission for Discipline Inspection has stationed discipline inspection groups at the General Administration of Customs of China.
China currently has no legal instrument similar to the Trade Barriers Regulation of the European Union or Section 301 of the US Trade Act of 1974.
In 2025, China Customs implemented a series of important legal and regulatory activities to optimise the access and regulatory model for imported goods and promote the development of foreign trade. The General Administration of Customs issued the “Regulations on the Administration of Declaration of Import and Export Goods of China Customs” to standardise the declaration and inspection of imported and exported goods. In addition, it will launch a reform of the “two-step declaration” customs clearance model to optimise the pilot programme and promote trade facilitation.
In accordance with the China Export Control Law and other relevant laws and regulations, on 9 October 2025, the Ministry of Commerce, together with the General Administration of Customs, issued an announcement on the implementation of export control measures on five types of medium and heavy rare earths including superhard materials, rare earth equipment and raw/auxiliary materials and holmium, lithium batteries and artificial graphite negative electrode materials. These measures were officially implemented on 8 November 2025.
The General Administration of Customs also issued an announcement on the implementation of mutual recognition of Authorised Economic Operators (AEO) between China and Mongolia, which officially took effect on 1 June 2025. This will help strengthen the management of special customs supervision areas, bonded supervision areas and off-zone processing trade.
In addition, the General Administration of Customs issued an announcement on adjusting the relevant management measures for customs special supervision areas, bonded supervision areas, and processing trade outside the area, involving the management of commodities such as tariff quota management and trade relief measures.
In the future, China customs and import measures may undergo significant changes in the following areas.
China’s sanctions regime comprises laws, administrative regulations and departmental rules including the China Anti-Foreign Sanctions Law, the China National Security Law, the China Cybersecurity Law, the China Anti-Terrorism Law, the China Personal Information Protection Law, the China Foreign Trade Law, the China Foreign Relations Law, the China Anti-Money Laundering Law, the Administrative Penalty Law, the Criminal Law, the Measures for Blocking the Improper Extraterritorial Application of Foreign Laws and Measures, the Provisions on the Unreliable Entity List and the Provisions on the Implementation of the China Anti-Foreign Sanctions Law.
China’s Ministry of Commerce and Ministry of Foreign Affairs are the primary regulatory bodies for sanctions in China. The Ministry of Commerce is responsible for import and export controls and trade-related sanctions. The Ministry of Foreign Affairs is responsible for the country’s foreign policy, including sanctions against foreign entities and individuals. The State Council’s Foreign Affairs, Commerce, Development and Reform Commission and Justice Administration departments, in accordance with their respective responsibilities and tasks, are responsible for the co-ordination mechanism for countering foreign sanctions. Relevant departments of the State Council will strengthen co-ordination and information sharing in the identification and implementation of countermeasures.
In addition to the Ministry of Foreign Affairs and the Ministry of Commerce of the State Council of China, the government agencies responsible for managing and implementing the sanctions regime include relevant departments such as the National Immigration Administration, public security, finance, natural resources, transportation, customs, market supervision, financial management and intellectual property, as well as relevant departments of the State Council such as education, science and technology, judicial administration, ecological environment, commerce, culture and tourism, health, and sports administration.
Chinese citizens, legal persons, and other organisations, as well as those engaging in activities within China, must comply with Chinese sanctions laws, regulations and other provisions. Foreign citizens, legal persons and other organisations engaging in activities outside China, as well as those that violate relevant laws, may also be held legally liable.
China’s laws and regulations, such as the China Anti-Foreign Sanctions Law and the Regulations on the Unreliable Entity List, provide that relevant departments of the State Council may designate individuals and organisations that directly or indirectly participate in the formulation, decision-making or implementation of discriminatory restrictive measures as being included in the counter-measures list. Furthermore, relevant departments of the State Council may also decide to take counter-measures against the following individuals and organisations:
Depending on the circumstances, these measures may include one or more of the following:
China has not yet released a list of sanctions or embargoes targeting specific countries and regions.
China currently does not maintain any other types of sanctions (non-embargo, full embargo, non-list-based).
China has not imposed or threatened to impose sanctions on transactions unrelated to China (secondary sanctions).
According to the relevant provisions of the China Anti-Foreign Sanctions Law and other laws, regulations and rules, violations of sanctions-related laws and regulations may result in being placed on the countermeasures list and subject to countermeasures (including the denial of visas, entry denial, visa cancellation, or deportation; the seizure, detention, and freezing of movable, immovable, and other property within Chinese territory; the prohibition or restriction of organisations or individuals within Chinese territory from engaging in relevant transactions or cooperation with them; and other necessary measures).
Violators may also be placed on the Unreliable Entity List and be subject to disciplinary measures (such as restrictions or prohibitions on import and export activities related to China; restrictions or prohibitions on investment within China; restrictions or prohibitions on the entry of related personnel and transportation vehicles; restrictions or cancellations of related personnel’s work permits, stay or residence permits within China; and fines commensurate with the severity of the circumstances; and other necessary measures). Violators may face civil lawsuits from relevant individuals or organisations.
Violations of Chinese criminal law may also result in criminal prosecution and other consequences and risks. Furthermore, there is the potential for reputational damage, loss of business opportunities and investigations, prosecutions, and trials by other Chinese and other state agencies and organisations.
Pursuant to the Provisions on the Unreliable Entity List, where Chinese enterprises, other organisations or individuals have a genuine need to conduct transactions with foreign entities restricted or prohibited from engaging in import-export activities related to China under special circumstances, they shall submit an application to the Office of the Working Mechanism established by the relevant departments of the central state organs. Upon approval, they may engage in corresponding transactions with such foreign entities.
China adheres to an independent and peaceful foreign policy and the Five Principles of Peaceful Coexistence: mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence. It upholds the international system with the United Nations at its core and the international order based on international law, develops friendly co-operation with all countries, and promotes the building of a community with a shared future for mankind. China opposes hegemony and power politics, and opposes any country interfering in China’s internal affairs under any pretext or in any way. China opposes foreign containment and suppression, the imposition of discriminatory restrictive measures against Chinese citizens and organisations, and interference in its internal affairs.
According to the relevant provisions of the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures, if Chinese citizens, legal persons or other organisations encounter situations where foreign laws and measures prohibit or restrict their normal economic, trade and related activities with third countries (regions) and their citizens, legal persons or other organisations, they shall truthfully report the relevant situation to the commerce department of the State Council within 30 days.
China has established the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures. These measures apply to situations where the extraterritorial application of foreign laws and measures violates international law and basic norms governing international relations, and improperly prohibit or restrict Chinese citizens, legal persons or other organisations from conducting normal economic, trade and related activities with third countries (regions) and their citizens, legal persons or other organisations.
Key developments in sanctions-related law, regulatory activity, enforcement, litigation or public attention in the past 12 months are as follows.
Further refinement of China’s sanctions-related laws and regulations, coupled with enhanced enforcement efforts, is expected to be a key trend in China’s sanctions landscape over the next 12 months. Additionally, shifts in US-China relations and the ongoing sanctions-counter-sanctions dynamics between the two nations are likely to remain prominent topics and challenges in the coming period.
China’s export control laws and regulations include the Export Control Law of China, the Foreign Trade Law, the National Security Law, the Data Security Law, the Nuclear Safety Law, the Customs Law, the Administrative Licensing Law, the Administrative Penalty Law, the Criminal Law, etc.
The export control departments of the State Council and the Central Military Commission are responsible for export control work in accordance with their respective duties. Other relevant departments of the State Council and the Central Military Commission are responsible for export control-related work in accordance with their respective duties.
China has established a national co-ordination mechanism for export control to oversee major matters related to export control. The national export control administration and relevant departments of the State Council closely co-operate and enhance information sharing. China’s national export control administration, in conjunction with relevant departments, establishes an expert advisory mechanism for export controls to provide consultation on export control matters. It also issues industry-specific export control guidelines as appropriate to guide export operators in establishing and improving internal compliance systems for export controls and standardising their operations. Relevant departments of the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government are responsible for export control-related work in accordance with the provisions of laws and administrative regulations.
China exercises export controls on dual-use items, military products, nuclear products, and other goods, technologies and services related to safeguarding national security and interests and fulfilling international obligations such as non-proliferation. Controlled items include technical data and other related data.
China’s national export control administration department establishes a control list for importers and end-users who:
The National Export Control Administration Department may take necessary measures against importers and end-users included in the control list, such as prohibiting or restricting transactions in the relevant controlled items and ordering the suspension of exports.
The national export control management department shall, in accordance with the provisions of relevant laws and administrative regulations, based on export control policies and in accordance with prescribed procedures, jointly with relevant departments, formulate and adjust the export control list of controlled items and publish it in a timely manner.
According to China’s Export Control Law, to safeguard national security and interests, or fulfil international obligations such as non-proliferation, China’s national export control administration may, with the approval of the State Council, or the State Council and the Central Military Commission, impose temporary controls on goods, technologies and services not on the export control list and make an announcement. The duration of temporary controls shall not exceed two years. Before the expiration of the temporary control period, an assessment shall be conducted promptly, and based on the assessment results, a decision shall be made to cancel, extend or add the temporarily controlled items to the export control list. China may also prohibit the export of relevant controlled items, or prohibit the export of relevant controlled items to specific destination countries and regions, organisations or individuals.
Individuals and organisations that violate China’s export controls may be subject to fines; orders to suspend operations for rectification, up to and including revocation of their export licences for controlled items; refusal to process export licence applications for a specified period; and prohibitions from engaging in relevant export activities for a specified period or for life. Criminal offences may also result in criminal prosecution.
China implements a licensing system for the export of controlled items. Exporters of controlled items listed on the export control list or temporarily controlled items must apply for a licence from the national export control administration department.
Export control efforts should adhere to the overall national security outlook, uphold international peace, balance security and development, and enhance export control management and services.
The end-user of controlled items shall undertake not to alter the end-use of such items or transfer them to any third party without authorisation from the national export control administration. Should export operators or importers discover any potential change in the end-user or end-use, they shall immediately report such circumstances to the national export control administration in accordance with regulations.
On 9 October 2025, the Ministry of Commerce and the General Administration of Customs of China issued Announcement No 55, No 56, No 57 and No 58 of 2025, announcing the decision to implement export controls on items related to superhard materials, the decision to implement export controls on some rare earth equipment and raw and auxiliary materials, the decision to implement export controls on some medium and heavy rare earth items, and the decision to implement export controls on items related to lithium batteries and artificial graphite negative electrode materials.
In the next 12 months, China will further accelerate the improvement of the modern national export control system, continuously enhance the effectiveness of export control, co-ordinate development and security, and ensure high-quality development with high-level security. Specifically, China will further improve laws and regulations, strengthen item listing, enhance licensing enforcement, strengthen multilateral and bilateral export control dialogues and exchanges, and promote compliance construction to better safeguard China’s national sovereignty, security and development interests.
The Ministry of Commerce of China is the authority governing the imposition of AD/CVD duties and safeguard measures.
China’s Ministry of Commerce, the Customs Tariff Commission of the State Council, Customs and other relevant agencies are responsible for the management and implementation of anti-dumping/countervailing duties and safeguard measures.
Natural persons, legal persons or relevant organisations in or representing domestic industries may submit written applications for investigation to the Ministry of Commerce in accordance with the law.
Domestic enterprises may submit applications, whether temporary or regular, provided they meet legal requirements. Domestic enterprises may apply according to their own needs.
During anti-dumping proceedings, the Ministry of Commerce shall notify the relevant exporting country (region) government before deciding to initiate an investigation. The Ministry of Commerce shall announce the decision to initiate an investigation and notify the applicant, known exporters and importers, the government of the exporting country (region), and other interested organisations and individuals (hereinafter referred to as “stakeholders”). Once the decision to initiate an investigation is announced, the Ministry of Commerce shall provide the text of the application to known exporters and the government of the exporting country (region).
The Ministry of Commerce may use questionnaires, sampling, hearings, on-site inspections and other methods to gather information from stakeholders and conduct investigations. It shall provide stakeholders with an opportunity to present their opinions and arguments. If deemed necessary, it may dispatch personnel to the relevant country (region) to conduct an investigation, except where the relevant country (region) raises objections. During the investigation, interested parties shall truthfully report the situation and provide relevant information. If an interested party fails to truthfully report the situation or provide relevant information, fails to provide necessary information within a reasonable time, or otherwise seriously obstructs the investigation, the Ministry of Commerce may make a ruling based on the facts obtained and the best available information. There are similar participation provisions in anti-subsidy and safeguard procedures.
In China, the relevant procedures for investigating and imposing anti-dumping duties are as follows.
There is a similar process for investigating and imposing countervailing duties and taking safeguard measures.
During anti-dumping proceedings, the Ministry of Commerce, based on the results of its investigation, will make a preliminary ruling on whether dumping, injury and the causal relationship between the two have been established, and will announce the decision. If the preliminary ruling determines that dumping, injury and the causal relationship between the two have been established, the Ministry of Commerce shall continue its investigation into dumping and the margin of dumping, injury and the extent of injury, and make a final ruling based on the results of the investigation, and announce the decision.
There are similar provisions in countervailing and safeguard procedures.
There are no jurisdictions in China where the authorities cannot or will not impose AD/CVD duties or safeguards.
In the anti-dumping procedure, the period for imposing anti-dumping duties and the period for fulfilling price undertakings shall not exceed five years; however, if it is determined upon review that the termination of the imposition of anti-dumping duties is likely to lead to the continuation or recurrence of dumping and injury, the period for imposing anti-dumping duties may be appropriately extended.
There are similar provisions in countervailing and safeguard procedures.
In anti-dumping proceedings, after anti-dumping duties take effect, the Ministry of Commerce may, if justified, decide to review the necessity of continuing to impose them. It may also, after a reasonable period of time, upon the request of an interested party and after reviewing the relevant evidence provided by the interested party, decide to review the necessity of continuing to impose them. After a price undertaking takes effect, the Ministry of Commerce may, if justified, decide to review the necessity of continuing to honour it. It may also, after a reasonable period of time, upon the request of an interested party and after reviewing the relevant evidence provided by the interested party, decide to review the necessity of continuing to honour it. Based on the results of the review, the Ministry of Commerce shall, in accordance with the provisions of the relevant Regulations, make a recommendation to retain, modify or cancel the anti-dumping duties. The State Council Tariff Commission shall make a decision based on the Ministry of Commerce’s recommendation, which shall be announced by the Ministry of Commerce.
Alternatively, the Ministry of Commerce may make a decision to retain, modify or cancel the price undertaking in accordance with the provisions of these Regulations and announce it. The review procedure shall be conducted in accordance with the relevant provisions of the Regulations regarding anti-dumping investigations and shall not exceed 12 months from the date of the decision to commence the review. During the review period, the review procedure does not hinder the implementation of anti-dumping measures.
There are similar provisions in countervailing and safeguard procedures.
Relevant laws and regulations do not provide for a specific appeal procedure, but the review procedure mentioned in 5.10 Review Process can be understood as a type of appeal procedure. This is because, according to relevant laws and regulations, the Ministry of Commerce may, upon request from an interested party and after reviewing the relevant evidence provided by the interested party, decide to review the necessity of continuing to impose anti-dumping duties.
There are similar provisions in anti-subsidy procedures.
The Ministry of Commerce of China has studied and drafted the Anti-Circumvention Rules on Trade Relief Measures (Draft for Comments) and published it on the Ministry of Commerce website on 30 July 2025, soliciting public opinions.
Trade conflicts and uncertainties are likely to persist in international trade over the next 12 months. China will further improve its legislation and strengthen its crackdown on circumvention.
In China, foreign investment that affects or may affect national security is subject to security review in accordance with relevant laws and regulations. China has established a working mechanism for foreign investment security review, responsible for organising, co-ordinating and guiding this work. The working mechanism’s office is located within the National Development and Reform Commission (NDRC), and is led by the NDRC and the Ministry of Commerce. It oversees the day-to-day work of foreign investment security review.
The security review process is as follows.
The special review shall be completed within 60 working days from the date of initiation; the review period may be extended in special circumstances. The parties concerned shall be notified of any extension of the review period in writing. During the review period, the parties concerned may not make any investment.
The same applies to investments made by investors from the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan that affect or may affect national security.
The state has established a working mechanism for foreign investment security reviews, responsible for organising, co-ordinating and guiding this work. The working mechanism’s office, located within the NDRC, is spearheaded by the NDRC and the Ministry of Commerce and is responsible for the day-to-day work of foreign investment security reviews. Decisions on foreign investment security reviews will be overseen and implemented by the working mechanism’s office in conjunction with relevant departments and local people’s governments.
Foreign investors or relevant domestic parties must proactively report foreign investment within the following categories to the Office of the Working Mechanism before implementing the investment:
Obtaining actual control of the invested enterprise includes the following circumstances:
For foreign investment within a specific scope, foreign investors or relevant domestic parties should proactively report to the working mechanism office before implementing the investment.
Relevant laws and administrative regulations do not specify which projects or teams are exempt from review. Generally speaking, foreign investment that affects or may affect national security must be declared and reviewed in accordance with laws and regulations.
Potential penalties and consequences may include orders from the working mechanism office to declare within a specified timeframe; orders to dispose of equity or assets within a specified timeframe and take other necessary measures to restore the investment to its pre-investment status and eliminate any impact on national security; revocation of relevant decisions; and orders to rectify the situation. Furthermore, related behaviour may be recorded as a negative credit record in the relevant national credit information system, subject to joint penalties in accordance with relevant national regulations.
In China, certain fees are required to be paid during the investment security review or filing process. These fees include, but are not limited to, the following:
In 2024, the Ministry of Commerce, China Securities Regulatory Commission, State-Owned Assets Supervision and Administration Commission of the State Council, State Taxation Administration, State Administration for Market Regulation, and State Administration of Foreign Exchange jointly issued the Administrative Measures for Strategic Investments in Listed Companies by Foreign Investors. These measures took effect on 2 December 2024. They stipulate that “where strategic investments by foreign investors in listed companies affect or may affect national security, security reviews shall be conducted in accordance with the Administrative Measures for Security Review of Foreign Investment and other relevant regulations”.
In the future, China may further refine its legislation on investment security reviews, detailing the specific scope and workflow of key areas. Furthermore, China may also publish more relevant cases to guide relevant practices.
On 27 June 2025, the Ministry of Finance, the State Administration of Taxation and the Ministry of Commerce jointly issued the Announcement on the Tax Credit Policy for Direct Investment by Overseas Investors with Distributed Profits, which clearly stipulates that during the period from 1 January 2025 to 31 December 2028, overseas investors who use profits distributed by resident enterprises in China for direct investment in China can enjoy tax credits if they meet the conditions.
Standards (including standard samples) refer to unified technical requirements in fields such as agriculture, industry, services and social services. Chinese standards include national standards, industry standards, local standards, group standards and enterprise standards. National standards are categorised as mandatory and recommended, while industry and local standards are recommended. Mandatory standards must be followed. China encourages the adoption of recommended standards.
No standards or other technical requirements specifically designed to reduce imports and/or encourage domestic production have been identified in China at this time.
To date, no sanitary and phytosanitary requirements specifically designed to reduce imports and/or encourage domestic production have been identified in China. The Law of the People’s Republic of China on Entry and Exit Animal and Plant Quarantine (2009 Amendment) was enacted to prevent the entry and exit of infectious and parasitic animal diseases, dangerous plant diseases, insects, weeds and other harmful organisms, to protect agricultural, forestry, animal husbandry, and fishery production and human health, and to promote the development of foreign economic and trade relations.
To date, no competition policy or price controls specifically designed to reduce imports and/or encourage domestic production have been identified in China. According to the Foreign Investment Law of the People’s Republic of China, China adheres to its fundamental national policy of opening up to the outside world and encourages foreign investors to invest in China in accordance with the law. The country implements high-level investment liberalisation and facilitation policies, establishes and improves mechanisms to promote foreign investment, and fosters a stable, transparent, predictable and fair market environment.
To date, no state trading, state-owned enterprises and privatisation measures specifically aimed at reducing imports and/or encouraging domestic production have been identified in China. According to the relevant provisions of the Foreign Investment Law of the People’s Republic of China, the Chinese state protects the investments, returns and other lawful rights and interests of foreign investors within China in accordance with law. The state does not expropriate foreign investors’ investments. In exceptional circumstances, the state may, in accordance with law, expropriate or requisition foreign investors’ investments for the public interest. Such expropriation or requisition shall be carried out in accordance with legal procedures, and fair and reasonable compensation shall be provided promptly.
To date, there is no known effective “buy national/local” requirement in China specifically designed to reduce imports and/or encourage domestic production.
According to the relevant provisions of the Foreign Investment Law of the People’s Republic of China, China adheres to the fundamental national policy of opening up to the outside world and encourages foreign investors to invest in China in accordance with the law. The state implements high-level investment liberalisation and facilitation policies, establishes and improves foreign investment promotion mechanisms, and fosters a stable, transparent, predictable and fair market environment. The state guarantees that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law. Government procurement treats foreign-invested enterprises equally in accordance with the law regarding products produced and services provided by them in China.
To date, no geographical indication protection measures specifically aimed at reducing imports and/or encouraging domestic production have been identified in China.
How to effectively develop international trade agreements and national international trade laws to reduce global trade conflicts and policy uncertainties that worsen the global economic outlook is a crucial and worthy topic for discussion.
14F, North Tower
Beijing Kerry Centre
No1 Guanghua Road
Chaoyang District
Beijing 100020
China
+86 10 8567 5962; +86 134 6672 0196
+86 10 8567 5988 (adm)
nanxing@anjielaw.com www.anjielaw.com
In 2025, China’s export control regime underwent significant adjustments and enhancements amid heightened international geopolitical tensions and the imperative to safeguard supply chain security. Notably, the Bureau of Industry Security and Import/Export Control under China’s Ministry of Commerce issued two announcements, No 61 and No 62, that extended export control requirements for specific rare earth elements and their derivative products to foreign entities and technology transfers.
These measures reflect the extraterritorial jurisdiction established under Article 49 of the People’s Republic of China Export Control Regulations for Dual-Use Items (the “2024 Regulations on Export Control of Dual-Use Items”), and introduce, for the first time, a groundbreaking “50% penetration rule” for entities listed on the Control List (based on the 2020 Export Control Law and the 2024 Dual-Use Items Export Control Regulation) and Watch List (based on the Dual-Use Items Export Control Regulation effective from 1 December 2024).
Announcement No 61: Extraterritorial Jurisdiction and the 50% Penetration Rule for Rare Earth Export Controls
Assessing the need to apply for a dual-use item export licence: two “overseas” scenarios
The core requirement of Announcement No 61 of 2025 is that foreign organisations and individuals must obtain a dual-use item export licence from China’s Ministry of Commerce before exporting specific rare earth items to countries or regions other than China. This marks a significant expansion of China’s export control regime from traditional territorial jurisdiction to extraterritorial jurisdiction.
Article 49 of the 2024 Regulations on Export Control of Dual-Use Items has established a limited scope of extraterritorial jurisdiction, stipulating that when foreign organisations or individuals transfer “Chinese dual-use items” outside China to specific destination countries, regions or designated organisations or individuals, the competent commerce authority of the State Council may require the relevant exporters to comply with the provisions of the Regulations. “Chinese dual-use items” include: dual-use items manufactured outside China that contain, integrate, or are mixed with specific dual-use items originating from China; dual-use items manufactured outside China using specific technologies originating from China; and specific dual-use items originating from China.
Further, announcement No 61 operationalises this principle, extending the scope of control to the global supply chain to prevent the circumvention of controls through overseas trans-shipment of Chinese rare earth items. The following shows the core licence requirements and Compliance Key Points of Article 1 of Announcement No 61.
Foreign organisations and individuals must obtain a dual-use item export licence from China’s Ministry of Commerce before exporting the following items to countries or regions other than China.
Licence review policy and compliance requirements
If, upon assessment, a foreign factory meets the conditions specified under Article 1 of Announcement No 61 requiring an application for a dual-use item export licence from China’s Ministry of Commerce, the foreign exporter must apply for the licence. The application of such licence shall include relevant materials such as the application form, proof of identity, copies of contracts, technical specifications, and end-user and end-use certifications.
China’s Ministry of Commerce will conduct the review and evaluate the destination countries or regions for the export of dual-use items.
Of particular note, Announcement No 61 explicitly sets out the following licence review standards for specific scenarios.
Licence review standards importers and end-users – generally not approved
Licence review standards for five categories of end uses
Announcement No 62: Extraterritorial Jurisdiction and Compliance Requirements for Rare Earth Technology Exports
The core elements of Announcement No 62 of 2025 are outlined in the following three points.
Item control – focus on export controls for rare earth-related technologies
Announcement No 62 explicitly prohibits the export of two categories of technologies without a licence, as follows.
The definitions and scope of “rare earth”, “smelting and separation”, “metal smelting”, and “rare earth secondary resources” are governed by the relevant provisions of the People’s Republic of China Rare Earth Management Regulations.
Therefore, for enterprises in the rare earth supply chain, classifying technologies under China’s export control codes is of critical importance.
End-use control – applicability even to non-controlled items
Announcement No 62 emphasises that even non-controlled items require a dual-use item export licence if they are used in overseas activities related to rare earth mining, smelting and separation, metal smelting, magnetic material manufacturing, or rare earth secondary resource recovery.
Furthermore, Announcement No 62 clarifies that the determination of such end-uses is limited to cases where the exporter knows or has reason to believe the items are used or substantially contribute to such purposes. This imposes requirements on enterprises for ongoing export control compliance, necessitating due diligence on downstream customers’ end-uses to ensure exported products are not used for purposes subject to Chinese export controls.
Regarding the scope of exporters, Announcement No 62 distinguishes between personal jurisdiction and territorial jurisdiction:
Extraterritorial jurisdiction of Announcement No 62
In alignment with the definition in Article 2 of the 2024 Regulations on Export Control of Dual-Use Items, “export” under Announcement No 62 refers to the following activities involving controlled items (ie, the Export Control Codes: 1E902.a and 1E902.b):
The methods of “transfer” or “provision” include trade exports, as well as transfers or provisions through intellectual property licensing, investment, exchange, gifting, exhibitions, demonstrations, inspections, testing, aid, teaching, joint research and development, employment or hiring, consultation or any other means.
In light of the above, the extraterritorial jurisdiction under Article 49 of the 2024 Regulations on Export Control of Dual-Use Items applies equally here: even if the transfer occurs outside China, a licence is required if it involves providing controlled technologies (ie, Control Codes: 1E902.a and 1E902.b) to foreign entities. This expands the scope of control to cover all pathways of technology dissemination, preventing unauthorised technology outflows.
Additionally, Article 5 of Announcement No 62 prohibits providing intermediary services for illegal activities, aligning with the reporting obligations of service providers under Article 36 of the 2024 Regulations on Export Control of Dual-Use Items. Article 6 clarifies exemptions for public domain technologies (ie, technologies already in the public domain, technologies used in basic scientific research, or technologies necessary for general patent applications are not subject to this Announcement). However, disclosing controlled technologies in violation of Announcement No 62 will still be penalised under Article 34 of the 2024 Regulations on Export Control of Dual-Use Items.
Strategic Significance of Extraterritorial Jurisdiction in China’s Dual-Use Export Control Regulations
Under the framework of the 2024 Regulations on Export Control of Dual-Use Items, extraterritorial jurisdiction is a cornerstone of Announcements No 61 and No 62 of 2025.
Article 2 of the 2024 Regulations on Export Control of Dual-Use Items defines export controls as encompassing the transfer of dual-use items from within China to overseas and the provision of dual-use items by Chinese citizens or legal entities to foreign entities. Article 49 introduces an innovative approach by extending jurisdiction to the transfer of “Chinese dual-use items” outside China. This departs from traditional territorial principles, establishing limited extraterritorial authority: the competent authority “may require” compliance, which, based on our understanding, is typically limited to specific scenarios, including but not limited to certain destinations or high-risk contexts such as military end-users or entities on control lists, to avoid overreach.
The implementation of Announcements No 61 and No 62 operationalises the extraterritorial jurisdiction principle of the 2024 Regulations on Export Control of Dual-Use Items, targeting the global rare earth supply chain to ensure the extraterritorial reach of Chinese controls. This design strengthens China’s ability to address geopolitical challenges.
Enterprises should note that violations of extraterritorial jurisdiction may trigger provisions under Article 48 of the 2024 Regulations on Export Control of Dual-Use Items concerning transit, trans-shipment, or re-export controls, as well as penalties under Articles 39 to 46, which include fines ranging from five to ten times the value of illegal transactions and potential criminal liability.
The “50% Penetration Rule” for Export Control and Watch Lists: A New Compliance Challenge
Announcement No 61 emphasises that controls over entities listed on the export control list and watch list extend to their affiliates with 50% or greater ownership. Specifically, for export applications involving items covered by Announcement No 61, if the buyer or end-user is an importer or end-user listed on the export control or watch list (including their subsidiaries, branches or other affiliates with 50% or greater ownership), China’s Ministry of Commerce will generally not grant approval.
The enterprises affected by Announcement No 61 include not only traditional rare earth supply chain companies but also those involved in semiconductor research and manufacturing (eg, using rare earth items for the development or production of logic chips with 14-nanometer or smaller nodes, memory chips with 256 layers or more, or manufacturing equipment, testing equipment, and materials for such processes, including chip design and manufacturing companies, semiconductor equipment manufacturers, material suppliers, and testing equipment providers) and AI companies (eg, using rare earth materials for developing artificial intelligence with potential military applications, such as weapon systems or drone navigation).
The profound impact of the “50% penetration rule” under Announcement No 61 lies in supply chain transparency: enterprises in the aforementioned sectors must conduct thorough equity structure reviews to identify hidden affiliations (eg, circumvention through multi-layered ownership structures). It is recommended that enterprises establish internal export control compliance systems, including the use of data tools to track changes in customers’ equity structures, in accordance with the requirements under the relevant PRC export control laws and regulations.
Conclusion and Compliance Insights
Announcements No 61 and No 62 of 2025 serve as critical supplements to the implementation of the 2024 Regulations on Export Control of Dual-Use Items, strengthening export controls over the rare earth sector, with a particular emphasis on extraterritorial jurisdiction and the enforcement of the “50% penetration rule” for entities on the export control and watch lists.
It is recommended that enterprises, particularly those in the rare earth supply chain, related semiconductor research and manufacturing, and AI sectors, immediately assess their existing operations and establish a comprehensive export control compliance mechanism that encompasses both supply and sales chains. On the supply chain side, enhance the management of raw materials by verifying their origin and ensuring compliance with China’s export control codes to confirm procurement legality. On the sales chain side, strengthen due diligence on customers (including their equity structures and whether they are listed on China’s control or watch lists), prioritise investigations into end-uses, and require customers to sign compliance commitment letters in accordance with Chinese law.
9th, 11th and 12th Floors, Shanghai Tower
No 501 Yincheng Middle Road
Pudong New Area
Shanghai
200120
China
+86 13 764 180 680
+86 21 626 382 22
qiumengyun@allbrightlaw.com www.allbrightlaw.com