Wuzhuang Zhao: The Strategic Significance and Long-term Impact of "Dual-use Items" [Minor Metal Conference]

On June 12, at the 2025 SMM (13th) Minor Metal Industry Conference - Main Forum co-hosted by Shandong Humon Smelting Co., Ltd. and SMM Information & Technology Co., Ltd., Zhao Wuzhuang, former deputy director of the Policy Research Office of the China Nonferrous Metals Industry Association, shared insights on the topic of "Dual-Use Items Export Control" with attendees. He stated: In recent years, the Chinese government has implemented strengthened export control measures for scattered metals such as indium, germanium, and gallium, based on international legal documents including conventions prohibiting weapons of mass destruction like nuclear non-proliferation and the established dual-use items management catalog. As of now, China regulates the export of 15 nonferrous metals under dual-use items controls, including four scattered metals (indium, gallium, germanium, tellurium), four rare metals (tungsten, molybdenum, antimony, bismuth), and seven rare earth metals (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium).

I. Dual-Use Items Export Control

Export control, as an internationally common practice, refers to prohibitive or restrictive measures applied to the export of dual-use items, military products, nuclear materials, and other goods, technologies, and services related to safeguarding national security and interests or fulfilling international obligations such as non-proliferation. It serves as a crucial means to uphold national sovereignty, security, development interests, and international commitments. The scope of dual-use items export control is extensive. China has formulated corresponding export control lists for sensitive items and military products related to nuclear, biological, chemical, and missile fields. Apart from the Military Products Export Control List, other listed items are uniformly incorporated into the Dual-Use Items and Technologies Export License Management Catalog by the Ministry of Commerce and the General Administration of Customs, with corresponding customs commodity codes specified for management.

Currently, the Ministry of Commerce issues export licenses for dual-use items to over 1,000 enterprises annually, involving more than $20 billion. This reflects China's commitment and capability to fulfill non-proliferation obligations under new circumstances, safeguard national security, and support enterprises in international trade. It also raises higher requirements and expectations for enterprises to establish sound export control compliance mechanisms, strengthen compliance team capabilities, enhance full-process management of dual-use items, and promote high-quality development of China's foreign trade.

China's dual-use items export control management started relatively late. In the early 1990s, the Department of Science and Technology under the Ministry of Foreign Trade and Economic Cooperation established a dedicated office to specifically handle export control management of dual-use items. By the end of 2005, the Measures for the Administration of Import and Export Licenses for Dual-Use Items and Technologies (Order No. 29 of 2005 by the Ministry of Commerce and the General Administration of Customs) were issued, with attachments including the Dual-Use Items and Technologies Import and Export License Management Catalog. Since 2012, the "Management Catalog" has been updated annually. The current version is the "Export Control List of Dual-Use Items of the People's Republic of China" (hereinafter referred to as the "Dual-Use Items Control List"), which was announced on November 15, 2024, and implemented on December 1, 2024.

The "Dual-Use Items Control List" covers almost all non-ferrous metals, and the scope of these non-ferrous metals can be expanded and extended as needed. Different export management measures can be formulated by the Ministry of Commerce and the General Administration of Customs according to needs. These measures can be targeted at a specific country or at all products exported under a specific tariff code. For example, on February 4, 2025, the Ministry of Commerce and the General Administration of Customs issued an announcement deciding to implement export controls on items related to tungsten, tellurium, bismuth, molybdenum, and indium. Export operators exporting the involved items shall apply for licenses from the competent commerce department of the State Council in accordance with the relevant provisions of the "Export Control Law of the People's Republic of China" and the "Regulations of the People's Republic of China on the Export Control of Dual-Use Items." On December 3, 2024, the Ministry of Commerce issued the "Announcement on Strengthening Export Controls of Relevant Dual-Use Items to the US," prohibiting the export of dual-use items to military users or for military purposes in the US. In principle, licenses for the export of dual-use items related to gallium, germanium, antimony, and superhard materials to the US will not be granted; stricter end-user and end-use reviews will be implemented for the export of graphite dual-use items to the US.

Dual-use item controls are also implemented abroad. Developed economies have four international multilateral control mechanisms: the "Wassenaar Arrangement," the "Nuclear Suppliers Group," the "Missile Technology Control Regime," and the "Australia Group," collectively known as the "Four Major Mechanisms." These are multilateral control mechanisms with strong influence at the international level. Among them, the "Wassenaar Arrangement" covers conventional weapons, the "Nuclear Suppliers Group and Missile Technology Control Regime" cover nuclear and missile-related items, and the "Australia Group" covers biochemical items. All four mechanisms control advanced and sensitive items and technologies through lists and ensure communication and assessment reviews of control situations among member countries through regular meetings and information exchanges. Member countries implement controls through domestic laws. In terms of binding force, the Wassenaar Arrangement and the Nuclear Suppliers Group are stronger, followed by the Australia Group and the Missile Technology Control Regime. The origin of China's "Dual-Use Items Control List" comes from the "Four Major Mechanisms."

II. Impact of Strengthening Export Controls on Dual-Use Items

The strengthening of export controls on rare earth metals such as indium, gallium, germanium, tellurium, tungsten, molybdenum, antimony, bismuth, as well as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium will certainly have an impact on relevant domestic enterprises and relevant countries worldwide. Taking the export controls on gallium and germanium products announced on July 3, 2023, as an example, over the past two years, China's exports of gallium and germanium products have undergone a phase of adjustment from initial inadaptability to subsequent adaptation. In July 2023, following the announcement of the control policies, China's exports of gallium and germanium plummeted, with zero exports recorded in August and September. Exports gradually resumed after the issuance of the first batch of licenses in October. In 2024, China's exports of gallium and germanium products were generally normal, with a single export of metallic gallium reaching 8 mt, exceeding the maximum single export volume before the controls were imposed.

Over the past two years of strengthening export controls on gallium and germanium products, from a positive perspective, firstly, Chinese enterprises' pricing power in exports has increased. In 2024, the export price of gallium in China was more than 60% higher than the domestic market price, and that of germanium was more than 20% higher, with export prices exceeding domestic market prices. Secondly, export orders have concentrated on advantageous enterprises, demonstrating the effect of supporting and nurturing strong players. Thirdly, the downstream industry chain has shifted towards China, promoting the industrial upgrading of China's gallium and germanium sectors. Specific manifestations include a significant increase in the export share of infrared lenses and complete infrared devices; the transfer of the world's LED packaging and germanium catalyst capacities to the Chinese mainland; and the extension of Chinese high-purity gallium producers into downstream crystal materials, as well as the extension of substrate material producers into device manufacturing.

Strengthening export controls on gallium and germanium products in China will inevitably have some negative impacts. Firstly, foreign countries have intensified their resource development efforts and made progress. For instance, the US is advancing the extraction of gallium and germanium from lead-zinc smelting; and by the end of 2024, the DRC had already produced germanium concentrate products. Secondly, the development of alternative technologies has accelerated. Driven by the new technological revolution, the mutual substitution of materials is inevitable, as long as differences in performance and economic efficiency are disregarded. For example, infrared germanium products in the civilian sector are being replaced by silicon-based and tellurium-based infrared materials. Adequate awareness of this is necessary. Thirdly, smuggling or evasion in disguised forms has frequently occurred.

III. Several Observations

Firstly, introduce effective policies to assist enterprises in product sales. Implementing export controls will inevitably lead to temporary supply-demand imbalances in products. Therefore, while making good use of national strategic reserve policies, it is necessary to explore more flexible commercial reserve methods with the support of national policies, leverage the fundamental role of market mechanisms, address temporary market supply-demand imbalances, and maintain normal and stable enterprise production and operations.

Secondly, simplify and optimize the approval process to provide convenient services for enterprises. Improve the enterprise qualification assessment system, granting enterprises that have passed industry credit rating qualifications certain simplified export approval process treatments. Meanwhile, establish special channels for small-batch/small-volume inspection or certification orders, clarify enterprise responsibilities, conduct regular inspections and verifications, and simplify and optimize the approval process.

Third, update the list of controlled items in a timely manner according to changing circumstances. The national "Dual-Use Items Control List" is dynamic and requires adjustments based on the effectiveness of controls, as well as dynamic factors such as resource supply and technological progress.

Fourth, establish and improve a material tracking system. To ensure the effectiveness of controls and policy deterrence, and to prevent enterprises from unintentionally violating regulations, it is necessary to establish a tracking system for controlled items from the source, enhance the awareness of supervision over product flow across the entire industry chain, implement the principle of "who exports, who is responsible," and reduce the impact of individual violations on the industry as a whole.

》Click to view the special report on the 2025 SMM (13th) Minor Metal Industry Conference