China: An International Trade/WTO: Consultants (PRC Firms) Overview

Expanding Extraterritorial Jurisdiction: An Interpretation of China’s New Export Control Rules on Rare Earths

In recent years, China’s legislative process on export control has accelerated markedly, transitioning from fragmented management to a systematic and structured framework. The Export Control Law of the People’s Republic of China, implemented in 2020, consolidated existing regulations across various domains, including nuclear materials, military products, controlled chemicals, missiles and dual-use biological items, and established a unified legal regime governing control policies, control lists, temporary controls, entity lists and supervisory mechanisms. This development laid the foundation for a comprehensive and cohesive legal system for export control. With respect to dual-use items, China has formed a regulatory framework centred on the Regulation on the Export Control of Dual-Use Items (“the Regulation”), delineated by the Control List for Dual-Use Items and operationalised through the Catalogue for the Administration of Import and Export Licenses for Dual-Use Items and Technologies. This framework enhances and standardises the supervision and administration of dual-use exports.

On 9 October 2025, under statutory authorisation and with the approval of the State Council, the Ministry of Commerce (MOFCOM) issued Announcement No 61 and Announcement No 62, imposing export controls on “relevant overseas rare earth items” and “related rare earth technologies”. In practice, these measures have expanded the scope of China’s export control regime, evolving from traditional control over dual-use items and technologies to the assertion of extraterritorial jurisdiction.

Introduction of the 0.1% De Minimis Rule

The Regulation explicitly provides for its extraterritorial applicability. Even for acts occurring entirely outside of China, if overseas organisations or individuals transfer or supplyproducts that contain, integrate or are commingled with specific dual-use items of Chinese origin to designated countries, regions or parties, MOFCOM has the authority to require that the Regulation apply mutatis mutandis.

In the recently issued Announcement No 61, MOFCOM further clarified that if foreign-produced rare earth permanent magnet materials or sputtering targets contain 0.1% or more by value of specified rare earth metals or alloys originating from China, an export licence for dual-use items issued by MOFCOM must be obtained before such products are exported to countries or regions outside of China.

By applying the 0.1% “de minimis” threshold, MOFCOM has effectively provided that any rare earth permanent magnet material or sputtering target manufactured or processed outside China that contains even minute quantities of specified rare earth metals or their alloys of Chinese origin may fall within the jurisdictional scope of China’s export control regime. Substantively, this approach establishes a form of long-arm jurisdiction, significantly broadening the extraterritorial application and enforcement reach of China’s export controls on rare earths.

Establishing a technology-origin-based Foreign Direct Product (FDP) Rule

The Regulation provides that, should overseas organisations or individuals transfer or supply dual-use items manufactured abroad using specific technologies of Chinese origin, or other dual-use items of Chinese origin, to designated countries, regions, or parties, this Regulation shall apply mutatis mutandis.

MOFCOM’s Announcement No 61 further clarifies that any specified rare earth products manufactured abroad using related rare earth technologies originating from China (covering the entire process from mining, smelting and separation, and metal refining to magnet production and secondary resource recycling), must obtain a dual-use item export licence from MOFCOM, regardless of the production location or the source of raw materials.

This rule essentially establishes a China-specific version of the “Foreign Direct Product Rule” (FDP Rule), modelled after the US FDP framework. Even if a product is entirely manufactured outside China, it will nonetheless fall within the jurisdictional scope of China’s export control regime so long as it incorporates or relies upon rare earth technologies originating from China. This signifies that the extraterritorial application of China’s export control is no longer limited to items of Chinese origin, but is now, based on the source of technology, extended to foreign-produced items manufactured through the use of Chinese-controlled technologies.

Establishment of the 50% Ownership Look-Through Rule

According to the Regulation, MOFCOM has the authority to impose prohibitions or restrictions on exports to importers and end-users on the Control List. However, the Regulation did not explicitly stipulate provisions regarding subsidiaries, branches and other affiliated entities in which such listed entities hold a controlling interest of 50% or more.

Announcement No 61 provides further clarification, stating that when exporting to foreign military users, as well as to importers and end-users on the Export Control List and the Unverified List, the relevant restrictive measures will extend to subsidiaries, branches and other affiliated entities in which the listed entity holds a 50% or greater controlling interest. Export applications from these affiliated entities will be generally prohibited.

Under the 50% Ownership Look-Through Rule, once a company is listed on the Export Control List, not only is the company itself subject to trade restrictions, but so are its subsidiaries, branches and other affiliated enterprises that are held a 50% or more controlling interest. This not only facilitates more comprehensive regulation through equity relationships but also prevents potential evasion of control through affiliated companies from a systemic perspective.

Expansion of the scope of deemed exports

As per the Regulation, “export” is defined as the transfer of dual-use items from within China to outside China, as well as the provision of dual-use items by Chinese citizens, legal entities and other organisations to foreign organisations and individuals, including trade, gifting, exhibition, co-operation, assistance and other forms of transfer of dual-use items.

Announcement No 62 expands the definition of “export”, clarifying that the scope of related rare earth technologies’ exports now includes any transfer or provision through the licensing of intellectual property, investment, exchanges, gifting, exhibitions, displays, inspection, testing, assistance, imparting, joint research and development, employment or hiring, consultation and any other means.

This initiative further enriches the regulatory scope of “deemed exports”, helping to mitigate risks associated with the potential transfer of related rare earth technologies through non-trade channels.

The above outlines and interprets the key points regarding the export controls on relevant overseas rare earth itemsand related rare earth technologies based on Announcements No 61 and No 62 from MOFCOM. Following the outcomes achieved during the economic and trade consultations held in Kuala Lumpur between China and the USA, the aforementioned control measures are currently suspended.

拓展“域外管辖”：中国稀土出口管制新规解读

近年来，中国出口管制立法进程显著加快，逐步实现了从分散管理到体系化构建的转变。2020年实施的《中华人民共和国出口管制法》系统整合了核、军品、监控化学品、导弹及生物两用品等各领域的既有法规，统一确立了管制政策、管制清单、临时管制、管控名单及监督管理等基本制度，构建起全面、统一的法律体系。针对两用物项，中国形成了以《两用物项出口管制条例》为核心制度、以《两用物项出口管制清单》为范围界定、以《两用物项和技术进出口许可证管理目录》为执行指引的监管框架，加强并规范两用物项出口管制。

2025年10月9日，商务部依据法律授权并报经国务院批准，发布第61号与第62号公告，对“境外相关稀土物项”及“稀土相关技术”实施出口管制，在实践中扩展了出口管制的维度，从传统的两用物项（技术）出口管制发展到域外管辖。

新增适用0.1%的“最小比例规则”

《两用物项出口管制条例》明确规定具有域外适用效力，即使相关行为完全发生在中国境外，若境外组织或个人向特定国家、地区或特定对象转移或提供“含有、集成或者混有原产于中国的特定两用物项的产品”，商务部有权要求其参照本条例规定执行。

在最新发布的第61号公告中，商务部进一步明确：只要在境外生产的稀土永磁材料或靶材中，所含原产于中国的特定稀土金属或其合金的价值比例达到或超过0.1%，在将该产品出口至中国以外的国家或地区之前，必须事先取得中国签发的两用物项出口许可证件。

商务部此次适用0.1%的“最小比例”标准，意味着任何在境外生产、加工的稀土永磁材料或靶材产品，只要含有微量的中国特定稀土金属或其合金，都可能被纳入中国出口管制的管辖范围。这实质上构建了“长臂管辖”机制，拓宽了中国稀土出口管制的域外效力范围。

构建以技术来源为基础的“FDP规则”

《两用物项出口管制条例》规定，境外的组织和个人，若在中国境外向特定国家、地区或特定对象转移或提供“使用原产于中国的特定技术等两用物项在境外制造的两用物项”，可参照本条例执行。

本次商务部第61号公告进一步明确，凡是使用原产于中国的稀土相关技术（涵盖从开采、冶炼分离、金属冶炼、磁材制造到二次资源回收利用的技术）在境外生产的特定稀土产品，无论其生产地点或原材料来源如何，均须向商务部申请两用物项出口许可证。

该规则实质上建立了中国版的“外国直接产品规则”（FDP规则），对标美国的FDP规则。即便产品完全在境外生产，只要其使用了原产于中国的稀土技术，即属于中国出口管制管辖范围。这意味着中国出口管制的域外效力，不再局限于原产地为中国的物项，而是基于技术来源，扩展至任何利用中国受控技术生产的境外物项。

确立“50%股权穿透”规则

根据《两用物项出口管制条例》，商务部有权对被列入管控名单的进口商和最终用户采取禁止或限制出口等措施，但条例并未对这类实体所控股50%以上的子公司、分公司等关联机构作出明确规定。

商务部第61号公告对此作了进一步补充，明确在向境外军事用户，以及出口管制管控名单和关注名单中的进口商、最终用户出口时，相关限制措施将穿透至上述实体控股50%及以上的子公司、分公司等分支机构，并对这些关联实体的出口申请原则上不予许可。

根据“50%股权穿透”规则，一旦某公司被列入出口管制名单，不仅其自身受到贸易限制，其控股50%及以上的子公司、分公司等关联企业也将被一并限制。该规则不仅通过股权关系实现了更全面的监管，更从制度层面防范了通过控股关联公司逃避管制的风险。

扩大“视同出口”的适用范围

《两用物项出口管制条例》中，出口指“从中国境内向境外转移两用物项，以及中国公民、法人和非法人组织向外国组织和个人提供两用物项，包括两用物项的贸易性出口及对外赠送、展览、合作、援助和以其他方式进行的转移。”

此次商务部第62号公告扩展了“出口”的定义，明确将稀土相关技术的出口范围，延伸至通过知识产权许可、投资、交流、赠送、展览、展示、检测、测试、援助、传授、联合研发、受雇或雇佣、咨询等任何方式进行的转移或者提供。

此举进一步丰富了“视同出口”的规制范围，有助于进一步防范通过非贸易渠道可能导致的稀土相关技术转移风险。

以上是对中国商务部第61、62号公告中关于“境外相关稀土物项”及“稀土相关技术”出口管制要点的梳理与解读。基于中美在吉隆坡经贸磋商所达成的成果，上述管制措施目前暂停实施。