Richard Sanders, Staff Writer
Beijing aims to enforce its domestic laws beyond its borders by prohibiting the sale of certain goods to the US, impacting both Chinese and foreign companies.
These new export control regulations mark China’s initial effort to mirror the extraterritorial application of US and European sanctions, targeting Chinese products and those containing Chinese components. This week, China announced a ban on the sale of dual-use items to the US military and the export of materials like gallium and germanium.
According to the Chinese Ministry of Commerce, those overseas will also be subject to these restrictions. “Any organization or individual from any country or region that violates these provisions by transferring or providing relevant dual-use items from China to entities in the United States will be legally accountable,” it stated.
This initiative signifies China’s first use of controls that apply to both civilian and military products. Effective from Sunday, the rules allow for applications akin to the US Export Administration Regulations, although specific details on when this extraterritoriality might be enforced remain scarce.
This landmark decision escalates tensions with the US just weeks before Donald Trump’s inauguration. China is a leading global supplier of many critical minerals, and concerns over its dominance have intensified in Washington following initial export controls on gallium and germanium last year.
Cory Combs, an associate director at Trivium China, noted, “I’m not aware of another instance under the current regulatory framework.” He advised companies affected by these regulations to seek alternative supplies urgently, as they can no longer rely on potential loopholes.
The new rules expand upon earlier provisions in the 2020 export control legislation, which also applied to individuals and organizations both inside and outside China.
In recent years, the Chinese government has been enhancing its mechanisms to counter US sanctions and trade controls, implementing measures like the “Unreliable Entity List” and the “Export Control Law” in 2020, as well as the “Anti-Foreign Sanctions Law” in 2021. Additionally, it enacted a National Security Law for Hong Kong, asserting jurisdiction over actions beyond China’s borders.
While the new regulations are alarming, Combs remarked, “There’s no clear consensus on how far Beijing may go in investigating or penalizing third countries for suspected prohibited re-exports.” He added that the language primarily aims to eliminate loopholes for domestic firms rather than to create new means of punishing third countries.
According to Bloomberg Economics analysts Gerard DiPippo, Maeva Cousin, and Nicole Gorton-Caratelli, “Beijing’s export controls may not match Washington’s in terms of international surveillance, compliance, and enforcement,” while the statement vaguely threatens nations that assist the US in circumventing these controls.
