There are concerns, however, that the process could be arbitrarily enforced against countries that have poor diplomatic relations with Beijing.
China’s Export Control Law, which strengthens controls over strategic goods and advanced technology exports, went into effect in December 2020.
The commerce ministry is now working on regulations for exports of products that can be converted to military use under the Act and recently put out a proposal for public comment.
According to the proposed regulations, the government will conduct a risk assessment of the country or region to which the product is being exported. The risk grade is determined based on national security and interests as well as foreign policy needs.
Export licenses for high-risk destinations are expected to be subject to strict screening.
National security and interests were also included in the criteria used to create the list of products to be subject to export controls.
The regulations clearly state that the principle of “total national security outlook”, a concept put forth by President Xi Jinping, must be obeyed.
The scope of security is extensive, with 11 areas of security coverage: politics, land, military, economy, culture, society, science and technology, information, ecology, resources, and nuclear.
Strengthening control over products that can be used for military purposes is designed to prevent the proliferation of military products to terrorists and other groups. However, the selection of target items is still to be determined.
Since the authorities make decisions based on broad concepts such as national security, there is concern that arbitrary rulings will be made, especially when a trading partner has deteriorating relations with Beijing.
Rare-earth metals, which are used in the manufacture of high-performance magnets, could be subject to export controls depending on how authorities interpret the regulations. The risk assessment of export partner countries also remains ambiguous.
The regulations require Chinese exporters to provide documentation of proof regarding end users and their uses. The government also said that, if necessary, the end user would be required to provide a certificate issued by the national or local government.
The transfer of regulated products to third parties without the approval of the Chinese government is forbidden.
Overseas importers and end users who change the end use without permission will be placed on the regulated list, making them subject to measures such as embargoes and revocation of export licenses.