On October 9, 2025, China’s Industry Safety and Import/Export Control Bureau under the Ministry of Commerce (MOFCOM) issued several notifications to impose export controls on products, equipment, and technologies related to rare earth elements, semiconductors, superhard materials, and lithium batteries, among others.1 Notably, MOFCOM exercised the extraterritorial jurisdiction for the first time, as permitted by law, within its export control regime, by requiring foreign entities to obtain licenses when exporting certain controlled rare earth elements from one country/region outside China to another country/region outside China. MOFCOM’s action closely resembles the concept of “reexport” under US export control law, where transfers between third countries involving controlled content may be subject to licensing. MOFCOM also introduced an “Affiliates Rule” (or “50% Rule”) within its export control regime by imposing presumptive denial of any export licensing applications from importers and end-users on China’s export control entity list or watch list, as well as their branches and subsidiaries where the listed entities own 50% or greater ownership.
MOFCOM Notification No. 61/2025 (Article 1) imposes extraterritorial jurisdiction on foreign “specific export operators”, defined as individuals and entities outside China who engage in export activities of the following rare earth items, from a country/region outside China to another country/region outside China:
In addition to needing to obtain export licenses from MOFCOM, any foreign “specific export operator” as described above must also issue a “Compliance Statements” to its overseas recipient(s) when transferring the controlled items outside China.4 This requirement means that exporters, whether in China or abroad, must inform downstream recipients of applicable regulatory obligations — including licensing requirements for further export — to ensure that compliance with China’s export control laws is effectively passed down the supply chain.
Measure (3) above comes into effect immediately as of October 9, 2025, while Measures (1) and (2) above will have an implementation grace period until December 1, 2025.
MOFCOM imposed these measures pursuant to Article 49 of China’s Regulation on Export Control of Dual-Use Items (the “Regulation”), which permits MOFCOM to exercise extraterritorial jurisdiction in the export control regime under specified conditions (except that the Regulation does not provide for any minimal content requirement as stated in Measure (1) above). It is noteworthy that this is the first time that MOFCOM has exercised extraterritorial jurisdiction in its export controls regime.
As a direct response to the “Affiliates Rule” (or “50% Rule”) earlier imposed by the US Department of Commerce Bureau of Industry and Security (BIS) in the United States’ export control framework,5 MOFCOM introduced its own version of the “50% Rule” in Chinese export control regime. According to Article 2 of MOFCOM Notification No. 61/2025, China now imposes a presumptive denial of any export licensing application from importers and end-users that are subject to China’s export control entity list or watch list (“Listed Entities”), as well as their branches and subsidiaries in which the Listed Entities own 50% or greater ownership. While China has not yet publicly released a watch list, it has periodically published export control entity lists through formal MOFCOM announcements.6 The Regulation permits MOFCOM to reject export licensing applications from domestic branches and subsidiaries of Listed Entities.7 With the implementation of the “50% Rule,” MOFCOM now extends its export control authority to cover entities that are majority-owned (i.e., 50% or more) by Listed Entities, even if the entities are not explicitly named.
As background, MOFCOM maintains a consolidated Export Control List of Dual-Use Items (“ECL”), which specifies items subject to export licensing requirements. This list is periodically supplemented through separate MOFCOM announcements as illustrated further below. Notably, the 50% Rule does not apply to the List of Unreliable Entities (“UEL”), which is a separate sanctions-related list aimed at restricting blacklisted entities from trading with China.8
The “50% Rule” is a standalone provision in MOFCOM Notification No. 61/2025. It does not appear to apply to all items listed in the ECL. Rather, it is understood to apply specifically to the controlled items referenced in the same notification — most notably, rare earth items listed in Article 1 as specified above, and certain semiconductor and artificial intelligence items listed in Article 4.9 However, none of the other notifications published by MOFCOM on the same day specifically indicate the application of the “50 % Rule.” It remains unclear whether the “50% Rule” will also apply to all the other export control measures currently in effect or those that may be imposed in the future.
MOFCOM Notification No. 61/2025 also stipulates presumptive denial for any export licensing application involving exports to foreign military users (Article 2), or items that are used or have the potential to be used for design, development, production, or use of weapons of mass destruction and their delivery systems, terrorism, or military use or enhancement of military potential capabilities (Article 3).
As mentioned above, MOFCOM Notification No. 62/2025 imposes export controls on rare earth technologies, covering areas such as rare earth mining, smelting and separation, metal smelting, magnetic material manufacturing, and recycling of rare earth secondary resources, as well as technologies related to production line assembly, debugging, maintenance, repair and upgrade.
Separately, MOFCOM has issued a number of other notifications that supplement the ECL. These notifications primarily target items relating to emerging technologies and strategically sensitive sectors, including advanced manufacturing, electronics, and resource extraction.
1 See MOFCOM Notification No. 55/2025, export control measures on superhard materials; MOFCOM Notification No. 56/2025
