China tightens exports for military grade tech, ahead of Xi’s Russia trip

October 21

A DJI Inspire 1 Pro drone is flown during a demonstration at the SZ DJI Technology Co. headquarters in Shenzhen, China, on Wednesday, April 20, 2016.

Qilai Shen | Bloomberg | Getty Images

China has unveiled a set of export control regulations for so-called dual-use items, which refer to goods or technologies that can be used for civilian as well as military purposes, ahead of President Xi Jinping’s trip to Russia.

The regulations come amid intensified U.S. sanctions targeting Chinese companies which the U.S. deems have been supplying dual-use goods, such as drones, to aid Russia’s war effort in Ukraine.

The measures, which will take effect from Dec. 1, aim to “safeguard national security and interests, promote global cooperation on non-proliferation, strengthen and standardize export controls on dual-use items,” the State Council said Saturday, according to CNBC’s translation of the statement in Chinese.

Xi will be attending the BRICS summit in the Russian city of Kazan from Tuesday to Thursday, according to China’s foreign ministry.

Mao Ning, Chinese foreign ministry spokeswoman reiterated China’s opposition to the U.S. sanctions at a press briefing on Friday, saying that China had never supplied weapons to either Russia or Ukraine, and it strictly controlled exports of dual-use goods, including drones.

Last week, Washington added two Chinese companies to its sanction list, alleging they were involved in the production of aerial drones used by Russia in its war against Ukraine.

Materials and technology that could be used for aerospace application might be among the first batch of items on the export control list, Benjamin Cavender, managing director at China Market Research Group said, “given how much drones have played a role in recent conflicts.”

China has attempted to show that “it is following similar norms as other nations in terms of how it regulates trade in dual-use goods,” he added.

Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, however, suggested that Russia will likely be exempted from the possible export controls.

The new regulations would put in place a licensing system for the export of dual-use items, and create a list of restricted goods, and exporters of such goods will have to disclose the ultimate users and intended use of the exported goods, the Chinese official statement said.

The ramped-up regulation “clearly represents a tit-for-tat approach to trade in dual-use goods,” said Alex Capri, a senior lecturer at the National University of Singapore, adding China could be focusing on items like rare earths and critical minerals.

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