The initial draft of the ECL was issued by the Ministry of Commerce of China for public comment in June 2017, followed by the release of a revised draft for public comment by the National People’s Congress in December 2019. At the end of June 2020, a further revised draft was submitted to the SCNPC for a second review. Four months later, and after deliberating a third revised draft, the SCNPC finally passed the ECL into law.
The passage into law of the ECL marks a significant step by the Chinese government towards the establishment of a comprehensive and consolidated export control regime, by providing the underlying legal basis for existing and future secondary regulations and other implementation rules in this area.
Some commentators have said that in the context of the ongoing US-China trade war, and the escalation of tensions between the two countries following President Trump’s imposition of a series of sanctions on Chinese companies including Huawei, ByteDance (TikTok), Tencent (WeChat) and Semiconductor Manufacturing International Corporation (SMIC), the enactment of the ECL will allow the Chinese government to take reciprocal measures against the United States, or any other country or region that abuses its own export control regime and threatens China’s national security and interests.
The ECL contains 49 articles separated into five chapters. The key matters addressed by the law are summarised as follows.
Article 2 of the ECL sets forth four categories of “controlled items”:
(a) dual-use items that can be used for both civil and military purposes;
(b) military items;
(c) nuclear items; and
(d) other goods, technologies, services and items that are vital to the protection of China’s national security and interests as well as the performance of China’s commitment to nuclear non-proliferation.
Controlled items also include technical data for any of the above.
The competent government authorities will issue lists of controlled items for the purpose of implementing the ECL.
In addition to the lists of controlled items, article 9 provides a catch-all provision pursuant to which any unlisted goods, technologies or services may nevertheless be temporarily controlled for a period of up to two years. When this period has elapsed, the temporary restrictions may be removed, extended or changed to permanent ones, depending on the results of an assessment conducted by the relevant government authorities.
Under article 2, the trade activities captured under the ECL include:
(a) the transfer of controlled items outside China; and
(b) “deemed export” – the provision of controlled items by Chinese citizens, legal persons or organisations to foreign institutions or individuals.
In addition, the transit, transhipment, and re-export of controlled items, as well as the export of controlled items from special customs supervision zones (e.g., bonded areas or export processing zones) and bonded supervision places (e.g., export supervision warehouses or bonded logistic centres), are also subject to the ECL.