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On 2025-12-02
by Laura Manson, Line Manager Regulation & Compliance

How U.S. and China’s Export Control Rules impact every business

Export Control rules
Summary

🌐 Navigating a Minefield of Binding Rules

In the world of international business, there is a huge new headache: export control. These are the rules some countries use to lock down their sensitive items, such as military items or anything that can be used for both civilian and military purposes (called “dual-use” items).

The U.S. and China, two heavyweights in terms of international rules, have both created massive rulebooks that reach far beyond their borders, creating challenges for any company that deals with either country. Both aim to protect their national security and interests, but in very different ways.

⚖️ Key Differences: Two Paths to Control

The U.S. has been defining export control rules for a long time now, whilst China is a new player in that space, adding new, slightly different rules.

1. The Playbook’s Age and Goal

  • U.S. Rules (EAR/ITAR): These rules are well  established, and super detailed. The U.S. goal is often to limit the other guy’s team by not sharing access to advanced technology like semiconductors.
  • China’s Rules (Export Control Law/2024 Regs): These are the new kids on the block, consolidated recently in 2020 and 2024. China’s goal is to protect and control its own supply chains and emerging technologies.

2. Who They Partner With (Multilateralism vs. Unilateralism)

  • U.S.: The U.S. is a team player, joining big international clubs like the Wassenaar Arrangement and the Missile Technology Control Regime (MTCR) to get everyone to agree on common controls.
  • China: China is acting more on its own (unilaterally), building rules specifically to counteract what other countries are doing. It reserves the right to take reciprocal measures against countries that misuse export control.

3. Licensing: Permission Slips

  • U.S.: Has some flexibility with “License Exceptions” and “No License Required” (NLR) designations. If your item isn’t too sensitive and depending on its destination, you might not need a full license.
  • China: The new law is stricter. While it doesn’t have a “NLR,” it does offer a simplified “registration-based export certificate” for specific low-risk activities, like sending something out for repair or to an exhibition, similar to some U.S. exceptions. And companies can have some licence to enable the import. Export control is not only a question of export, as you know. 

🤝 Key Similarities: The Universal Red Lines

Despite the fighting, the two systems agree on a few fundamentals. This creates global red lines that are not always aligned with the interests of other players, such as EU companies.

1. Extraterritorial Reach

This is the single biggest headache for global companies, as both countries may claim the right to control products made outside their borders.

  • U.S. “DNA Test”: U.S. rules can be applied for a European-made product if:
    •  it contains a certain percentage of U.S.-origin parts (De Minimis Rule)
    • it was manufactured using U.S.-origin software or blueprints (Foreign Direct Product Rule)
    • a US engineer was involved in the development of the product (“deemed export”).
  • China’s “New DNA Test”: China has used the same idea with its new Article 49. It says Chinese authorities can control foreign-made products if they contain, integrate, or use specific Chinese-origin materials or technology.

2. Controlling Data and Knowledge

Both nations control “Deemed Exports”, meaning the transfer of technical knowledge or data to a foreign national, even if the item never leaves the country.

  • U.S. Deemed Export: If you give a foreign engineer access to controlled tech/software inside the U.S., that’s a “deemed export” requiring a license. “Deemed reexport” also applies.
  • China’s Deemed Export: China’s rule is broader. It covers the “provision of controlled items” by any Chinese person or entity to a foreigner, and it applies regardless of where in the world this happens. This means giving a foreigner access to controlled data, even if both are in an office in London or Paris, could theoretically violate Chinese law.

3. The Blacklists: Restricted Parties

Both governments keep a list of people and companies you can’t trade with.

  • U.S. Lists: The “Entity List” (for serious security concerns) and the “Denied Persons List” can instantly crush a company’s ability to operate.
  • China’s Lists: They now have a “Watch List” (like the U.S. Unverified List, for those who don’t cooperate with checks) and a more serious “Control List” (like the Entity List, for serious violations or security threats).

The Coming 50% Rule: A Compliance Nightmare (And Your Screening Headache)

⚠️ Get Ready for the Deep Dive: If you thought supply chain due diligence was complex before, prepare for the next level. Soon, screening your partners will feel less like a simple background check and more like complex corporate genealogy, requiring you to map ownership trees until you find the (politically exposed) roots.

You must track not only US-origin components (e.g., the “de minimis rule”), but also who really owns or directs your partners. This is because both countries will look beyond simple ownership: China’s “Affiliates Rule” (or “50% Rule”) presumes denial for entities where a blacklisted party owns 50% or more, while the US (OFAC) urges caution even when influence is less than 50% (treated as “blocked property”).

 

🚨 The Hidden Cost: Why You Must Care

Ignoring these rules can severely impact your business.

  • Financial: Fines run into the millions for serious violations.
  • The Blacklist Effect: Being added to a Restricted Party List can shut down your supply chain overnight. Your partners will drop you like a hot potato, and you won’t be able to receive controlled items.
  • The Trilateral Compliance Burden (for non-U.S./China companies): You are constantly stuck in the middle. Your product must comply with your local (e.g., EU, French, German, Spanish, Indian…) laws, plus the U.S. rules (in case  of parts inside), and the new Chinese rules (if you include Chinese materials or technology to make it).

 

Conclusion on Expert Control Rules

Export Control compliance forces companies to perform complex due diligence. Constant monitoring compliance is no longer a simple checkbox, but a continuous strategic effort.

Airbus Protect helps companies stay at the top of their export control game by understanding the company’s needs and offering tailored services. Learn more here: https://www.protect.airbus.com/cybersecurity/export-control-data-protection/

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