金杜研究院 冯晓鹏 马聪

Since the Export Control Law of the People's Republic of China (hereinafter the 'Export Control Law') came into effect on December 1, 2020, China has fully entered an era of legally regulated export control over dual-use items. This Law, together with the Foreign Trade Law of the People's Republic of China and other relevant legislation, constitutes the superior legal framework governing current export control. As expressly stated in Article 1 of the Export Control Law, its core objective is to safeguard national security and interests, fulfil international obligations such as non-proliferation, and strengthen and standardize export control. Within this framework, the Regulations on the Export Control of Dual-Use Items further elaborate on the licensing system, customs verification procedures, and the management of end-users and end-uses of dual-use items.

In recent years, the Ministry of Commerce, the General Administration of Customs, and other relevant departments have issued multiple decisions, bringing key items such as tungsten, molybdenum, and other rare earth elements under control. At the same time, enforcement against the smuggling of dual-use items has been continuously strengthened, with the number of cases involving the smuggling of dual-use items showing an upward trend.

In view of the foregoing, this article intends to analyse the legal framework governing dual-use items, typical smuggling methods observed in judicial practice, associated legal risks, and key points for criminal defence, as well as providing practical recommendations for exporter to ensure compliant export of dual-use items.

01  Legal Framework for Export of Dual-Use Items

The Export Control Law defines dual-use items as goods, technologies, and services that have both civilian and military applications, or that could enhance military capabilities, especially those may be used in the design, development, production, or use of weapons of mass destruction and their delivery systems. For example, rare earth magnets, critical minerals, drones, telemetry equipment, and similar items that meet technical standards are all common dual-use items. The Regulations on the Export Control of Dual-Use Items further clarifies the management of export, any "transfer from domestic to overseas" is subject to control, not only through traditional trade but also via gifting, exhibitions, collaborations, aid, and other ways, ensuring that even non-commercial transfers are regulated. In addition, the transhipment, re-export, or export from customs-supervised or bonded areas must comply with the Export Control Law and the Regulations on the Export Control of Dual-Use Items. 

Generally, dual-use items are regulated by the Promulgation of the Export Control List of Dual-use Items, which specifies the scope of items subject to export control. In addition, the Ministry of Commerce will, as needed, include certain items within the scope of control through announcements. Exporters shall assess items against the performance indicators, primary uses, and other criteria specified in the Promulgation of the Export Control List of Dual-use Items and related announcements, in order to determine whether their export products are subject to export control based on the Promulgation and relevant announcements. 

Moreover, in accordance with Article 12 of the Export Control Law and Article 14 of the Regulations on the Export Control of Dual-Use Items, if an exporter knows or is informed that the items intended for export may pose risks to national security or may be used for weapons of mass destruction or terrorist purposes, a license must be obtained even if the items are not listed on the export control list.

For the export of dual-use items, a single or general license or an export certificate by registering the information shall be obtained. The single license authorizes an one-time export of a specific dual-use item to a single end user, with a validity period of up to one year. The general license allows the exporter to make multiple exports of specific dual-use items to one or more end users within the scope, conditions, and validity period specified in the license, with a maximum validity of three years. In addition, for certain specific items, exporters may obtain a Dual-Use Item Export Certificate through registration. In practice, such export certificates are mainly used for purposes like testing, inspection, and spare-part exports.

During the export declaration process, the exporter or its agent must present the license issued to Customs. Otherwise, if the Customs has evidence indicating that the goods may fall within the scope of export control, the Customs shall raise inquiries and request an identification procedure. During the period of identification or inquiry, the relevant export goods shall not be released in accordance with the law.

02  Legal Liabilities for the Illegal Export of Dual-Use Items

1. Criminal Liability

Article 43 of the Export Control Law provides that anyone who exports prohibited controlled items or export controlled items without a license may be subject to criminal liability under the law.

Under Article 151 of the Criminal Law and relevant judicial interpretation, if a person knowingly exports controlled items through false declaration, concealment, or other similar means, without obtaining the required license, and the items weighs over 20 tons or the value exceeds RMB 200,000, the act may constitute the crime of smuggling goods prohibited from export. The penalty may be up to five years of imprisonment or criminal detention, shall also or alternatively be fined. Where the items weigh over 100 tons or value over RMB 1,000,000, the penalty is more than five years of imprisonment plus a fine.

Furthermore, anyone who rents, borrows, or uses another party’s license to export goods subject to export control shall also be convicted and punished for smuggling goods prohibited from import or export. If an exporter, while having obtained a corresponding export license for controlled items, actually exports a quantity that exceeds the quantity specified on the export license, the act shall be convicted and punished as the crime of smuggling ordinary goods.

2. Administrative Liability

（1）Impose fine

According to Article 34 of the Export Control Law, if an export operator engages in the export of controlled items without obtaining the requisite export qualification, it shall be given a warning and ordered to cease the illegal activities. Its illegal gains shall be confiscated. Additionally, a fine shall be imposed based on the illegal business turnover:

If the illegal business turnover is RMB 500,000 or more, a fine of not less than five times but not more than ten times that turnover shall be imposed.

If there is no illegal business turnover or the turnover is less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5,000,000 shall be imposed.

（2）Withhold goods from release

According to Article 14 of the Regulations on Customs Administrative Penalties, where an exporter violates the national international trade regulatory framework by exporting restricted goods, and fails to submit required licenses during customs declaration, the goods shall be withheld from release.

（3）Refuse to accept application, suspend or prohibit from engaging in export-related activities

According to Article 34 of the Export Control Law, in serious cases, the violator shall be ordered to suspend its business for rectification or even be disqualified from exporting relevant controlled items.

According to Article 39 of the Export Control Law, where an exporter is penalized for violating this Law:

The Ministry of Commerce may refuse to accept its export license applications for five years from the effective date of the penalty decision;

Directly responsible personnel and other accountable persons may be prohibited from engaging in export-related activities for five years; Those receiving criminal penalties for export control violations shall be subject to permanent prohibition from export-related activities.

03 Defense Arguments Against Allegations of Illegal Export of Dual-Use Items

1. Whether the Goods Constitute Dual-Use Items

Whether the goods involved in the case are classified as dual-use items determines whether the conduct constitutes a crime and, if so, which crime. Under Article 19 of the Export Control Law, the Ministry of Commerce holds the authority to determine whether goods fall under dual-use export controls. In practice, there may be cases where the Customs considers an item controlled while Ministry of Commerce does not. The determination should be based on the item's technical specifications, the Promulgation of the Export Control List of Dual-use Items and Ministry of Commerce's latest announcements. If the item does not meet the criteria for a dual-use item, the exporter may apply to Ministry of Commerce for an official determination.

2. Whether the Exporters Acted with Intent to Violate the Law

One of the prerequisites for determining that exporters has committed smuggling is that the exporters has the subjective intent to smuggle. In practice, judicial authorities usually infer intent from conduct and available evidence, includes:

Confession or Admission: exporters' own statement or witness testimony can directly prove knowledge. For example, the exporters admitted that he knew a dual-use export license was required but still conspired to smuggle. This admission was used as direct proof of intent.

False Declarations or Concealment: If the suspect has taken deliberate measures to conceal the nature of the goods or their true destination, it is usually presumed that they are aware of the licensing requirements and are intentionally evading them.

Professional Status and Duty of Knowledge: In judicial practice, the perpetrator's subjective knowledge is usually comprehensively determined based on the obligation of "knowing or should have known" and the rules of evidence. Only when there is indeed evidence showing that the perpetrator lacks subjective intent may the case not be treated as a crime. 

Therefore, in such cases, the focus should be on examining the exporters' knowledge and actions, including whether there is explicit or inferred evidence of their violation of the law, and whether the behavior of the exporters reflects an intention to violate regulation. It should be noted that both legal presumptions and factual presumptions should allow for rebuttal. If there is contrary evidence that can prove that the exporters indeed has no subjective intent or has been deceived, it can rebut that the perpetrator does not have the subjective intent to smuggle.

04  Compliance Recommendations for Exporting Dual-Use Items

1. Identify High-Risk Items and Ensure Accurate Declarations

Exporters should monitor the latest Export Control List and pay attention to key criteria for controlled items, such as purity, chemical composition, dimensions, and performance indicators. If uncertain after comparing with the list, they should consult Ministry of Commerce under Article 14 of the Regulation on the Export Control of Dual-use Items, providing written materials including the performance indicators, main uses, and reasons for uncertainty of the items intended for export.

Once an item is confirmed to be controlled, the exporter must obtain the appropriate dual-use export license before shipment. When declaring for customs clearance, the exporter shall accurately fill in the name, specifications, end-use, and final destination of the goods, and submit the license information correctly to the Customs. Exporters should implement an internal review mechanism to ensure compliance checks before every declaration.

2. Strengthen Supply Chain and Customer Due Diligence

Dual-use controls require verification of end users and end uses. Exporters should require customers to provide end-user and end-use statements and conduct reasonable due diligence to verify their authenticity. If the end user, end use, or supporting documents change or appear fraudulent, the exporter should suspend the transaction and report it to the competent authorities. Upstream suppliers should also be screened to ensure purchased raw materials do not unintentionally cross control thresholds, with test reports obtained when necessary.

The export of dual-use items often involves the review of end-users and end-uses. Exporters should require customers to provide proof of end-users and end-uses and conduct reasonable due diligence to verify their authenticity. If, during the transaction, it is discovered that the end-user or end-use has changed, or that the relevant proof may be forged or invalid, the export should be immediately suspended and the Minister of Commerce should be notified. At the same time, the exporters should also control the upstream supply chain and  require suppliers to provide test reports.

3. Training, Policy Monitoring, and Dynamic Screening

Exporters should provide regular training for management and staff on export controls, covering identification of dual-use items, control list updates, license application requirements, and case studies of penalties and prosecutions.

Given that China’s control regime continues to expand, exporters should closely monitor Ministry of Commerce and customs announcements, track regulatory changes, and update their internal control lists accordingly. This helps ensure that every step of the export process remains legally compliant and avoids potential legal and financial risks.