In early 2026, the Ministry of Commerce (MOFCOM) placed 80 Japanese entities on export control lists and watch lists, signalling a more refined and tiered approach to managing dual-use exports to Japan. Companies in Japan-related supply chains should shift from reactive responses to proactive compliance.
Current policy
Chen Ziyuan
Partner, Director of the Japan Business Center
Anli Partners
China’s export control regime is centred on the Export Control Law and the Regulations on Export Control of Dual-Use Items. In the first half of 2026, the MOFCOM issued a series of notices establishing a framework built on “tiered entity lists plus key items”.
Controlled list regime. MOFCOM Notices No.11 and No.27 of 2026 placed 40 Japanese entities on the controlled list for helping enhance Japan’s military capabilities. Exports of dual-use items to listed entities are prohibited; overseas organisations and individuals are likewise barred from transferring or supplying China-origin dual-use items to them; and any related activities already under way must cease immediately.
Watch list regime. MOFCOM Notices No.12 and No.28 of 2026 placed 40 Japanese entities on the watch list. These entities are subject to stringent end-user and end-use review, and approval will not be granted for dual-use export items involving Japanese military end users, military end uses or uses that may enhance Japan’s military capabilities.
General military-related controls. Under MOFCOM Notice No.1 of 2026, exports of dual-use items are likewise prohibited to other end users or end uses not included on the above-mentioned lists where they involve Japanese military end users or military end uses or would help enhance Japan’s military capabilities.
Key items control mechanism. MOFCOM Notice No.26 of 2026 further detailed the mechanism for handling reports of violations relating to export controls on dual-use strategic mineral items, indicating that this area has become a regulatory priority.
Japan supply chain risks
Xu Mengqi
Associate
Anli Partners
Since the new rules took effect, Japan-related supply chains have faced stricter compliance scrutiny. First, item classification is difficult. Dual-use controls cover numerous product categories with highly complex technical parameters, spanning across chemical, biological, aerospace, and advanced electronics sectors. Many companies struggle to determine whether products are controlled, leaving them either failing to control items that should be controlled, or to adopt an indiscriminate blanket approach.
Second, tracing the end user and end use is difficult. Transaction chains are long and involve multiple links, making the ultimate end user and end use hard to verify. Transactions with watch list entities require screening to ensure goods are not diverted to military end users or end uses.
Third, many companies lack experience in licence applications. Some previously did not require licences for exports to Japan and are therefore unfamiliar with application material, review criteria and processing timelines. As a result, applications may be rejected, and penalties may even be triggered.
Finally, the risks arising from third-party resale should not be overlooked. Some companies mistakenly believe they can resell through a third country or party, but re-export trade carries legal risks as well.
Choosing a compliance path
Japan-related export controls do not amount to a blanket ban on exports to Japan. Rather, on national security grounds, they impose targeted controls on specific items, users and end uses. For purely civilian exports that do not involve military end users or end uses, and do not concern entities on the controlled list, companies need not adopt a one-size-fits-all approach.
Instead, they should establish compliance management mechanisms based on an accurate understanding of the policy and choose an appropriate course according to the level of transaction risk.
Item identification is the area in export management most prone to oversight. Companies should have qualified technical personnel clarify the names, specifications, parameters and uses of the goods, technology and services involved in the export to ensure the information is clear and accurate.
They should then match their products item by item against the dual-use items export control list, including extractable components, easily removable parts, related technology and services, and screen for corresponding or similar names and descriptions in the list. If a corresponding entry already exists in the list, it should in principle be managed as a dual-use item. Where this cannot be determined, companies may seek third-party classification support or consult the MOFCOM.
End-user and end-use risk screening sits at the core of export control compliance. Exports of controlled items to entities on the controlled list or watch list, military users or customers connected to weapons of mass destruction, terrorism or activities that may endanger China’s national security and interests will directly trigger legal risk. For companies, the key is to establish a systematic screening mechanism.
Companies can use public sources or information obtained from customers to assess if the end user or end use involves militarily sensitive activity and, if necessary, instruct local professional advisers in the customer’s jurisdiction to carry out due diligence.
Customers should also be required to provide documentary evidence of the end user and end use, while companies should watch for red flags such as purchases that do not match the customer’s business scope, or false consignee details.
In transactions involving longer and more complex chains, third-party databases can also be used for look-through screening to avoid missing connections between customers, end users, joint venture or co-operation partners, and military-related or listed entities.
Additionally, contracts should include end-user and end-use warranties, compliance undertakings and remedies for breach, clearly setting out the customer’s compliance obligations and liability in the event of breach.
For dual-use items that must be exported to Japan, companies should allow ample time for export licence applications.
Application materials must be complete, and information must be true, accurate and complete. Descriptions of the relevant item or technology must also conform to the list. Concealing facts or submitting false materials may invite customs scrutiny, administrative penalties or even criminal liability and may also jeopardise future access to licensing facilitation measures.
Commerce authorities may require supplementary materials or conduct on-site inspections during the review. For watch list entities, co-operation with inspections may affect whether they are later removed from the list.
Chen Ziyuan is a partner and director of the Japan Business Center at Anli Partners, while Xu Mengqi is an associate at the firm
Anli Partners
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E-mail: chenyifan@anlilaw.com | xumengqi@anlilaw.com
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