China’s Export Controls on Japan, Three Critical Risks Korean Companies Must Address
At the beginning of 2026, a major shift in the global supply chain landscape has emerged.
On January 6, 2026, the Chinese government announced sweeping export control measures targeting Japan, citing national security and national interest concerns.
This development is not merely a bilateral issue between China and Japan.
For Korean companies operating subsidiaries in China or sourcing key Chinese materials for transactions involving Japan, the impact is direct and potentially severe.
Proactive legal and compliance preparation is now essential.
China’s 2026 Export Control Announcement No. 1
Targeted Export Restrictions Against Japan
On January 6, 2026, China’s Ministry of Commerce and the General Administration of Customs jointly issued “Announcement No. 1 of 2026,” imposing comprehensive export controls on Japan.
This marks the first instance in which China has explicitly targeted a specific country through export control measures, signaling a structural shift in China’s trade and security policy.
Key Measures
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Comprehensive ban on military-related exports
All exports of dual-use items to Japanese military end users (MEU) or for military purposes are prohibited.
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Broad scope of controlled items
Including rare earth elements, gallium, germanium, graphite, semiconductor manufacturing equipment, high-performance sensors, and drones.
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Catch-all controls
Even non-listed items may be restricted if they are deemed capable of military end use.
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Prohibition of indirect or circumvention exports
Supplies routed through third countries, including Korea, to Japan are subject to enforcement.
Three Key Risks for Korean Companies
China’s export controls extend beyond China–Japan trade and directly affect Korean businesses embedded in China-centered supply chains.
1. Export Restrictions on China-Based Korean Subsidiaries
Korean companies manufacturing in China may face significant barriers or outright denial of export licenses when shipping products or components to Japan.
If the Japanese counterparty is linked—directly or indirectly—to the defense sector, companies may encounter contractual non-performance risks and potential legal disputes.
2. Heightened End-User and End-Use Certification (EUC) Requirements
Even where Japanese customers are civilian entities, Chinese authorities are likely to require strict and detailed proof that the goods will not be diverted to military use.
This may result in:
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Prolonged licensing reviews
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Requests for supplementary documentation
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License denials
All of which can disrupt delivery schedules and commercial relationships.
3. Sanctions and Blacklist Risks from Indirect Exports
This is the most critical risk area.
Where Korean companies import Chinese-origin materials, process them, and re-export finished products to Japan, Chinese authorities may view the transaction as an attempt to circumvent export controls.
Such a determination could expose companies to:
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Regulatory investigations
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Inclusion on control or blacklist regimes
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Long-term restrictions on operations involving China
Practical Compliance Checklist for Corporate Decision-Makers
China’s export control regime should now be treated as a permanent compliance issue, not a temporary disruption.
Korean companies should prioritize the following reviews:
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Classification of products based on HS codes, CAS numbers, and technical specifications
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Systematic management of end-user and end-use documentation
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Advance legal review of licensing requirements and regulatory exposure
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Review of force majeure and liability clauses in international contracts
Export Controls Require Structural Legal Planning
Decent Law Firm’s International Practice Team provides tailored legal solutions based on extensive experience in cross-border regulatory compliance.
Our advisory services include:
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Export control and sanctions risk assessments
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Structuring of re-export and third-country transaction models
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Legal support for overseas investments and China-based subsidiaries
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International contract risk management and dispute resolution
As China’s export control regime continues to reshape global supply chains, early legal assessment and well-structured transactions are critical to maintaining business continuity and regulatory certainty.
Decent Law Firm stands ready to support your export control and international compliance strategy.
