The Flanders-China Chamber of Commerce organized a webinar on “Caught in the Crossfire: Navigating China’s Export Controls and US Sanctions as a European Company,” on 9 July 2026.
Ms. Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce (FCCC) welcomed the participants to the webinar and introduced the topic and the speakers. Navigating China's export controls and U.S. sanctions is a very timely and important topic. European companies are increasingly confronted with complex and sometimes conflicting regulatory requirements: China is expanding its export control regime, while the United States is strengthening its sanctions and export controls, and the EU is developing its own economic security policies. For companies active in international trade, this creates a challenging environment. Businesses need to understand export controls, sanctions, re-export restrictions, supply chain risks, and compliance obligations across different jurisdictions.
Bilateral trade between the EU and China exceeds €700 billion, reflecting the strong economic interdependence between both sides. At the same time, European companies report that they are not becoming less dependent on China but, in several cases, more dependent. According to a recent survey, 56% of responders said they were increasing onshoring in China, driven by the cost competitiveness of Chinese supply chains and the need for deeper integration to remain globally competitive. Many respondents also consider China to be more efficient than other markets, and many see China as highly important for inputs. The topic of the webinar is very important, as companies need to understand how to operate in this changing environment, how to manage risks, and how to ensure compliance while continuing to do business internationally.
Giovanni Gijsels, Partner International Trade at PwC, explained that China’s expanding export control regime is a relatively recent development. What is different from the typical European export control measures is the extraterritorial reach of these Chinese export controls. In 2020, in a long-announced step, China launched its own export control regime, basically the export control law, which put all the foundations in place, its basic definitions, the regulatory scope, the framework, licensing rules, and end-user statement management. It also takes into account technical data, regulatory guidance and cross-border engineering, so it is actually a very broad framework. It is almost mirroring what the U.S. export control regime looks like, translated in a Chinese version. While the foundation was laid in 2020, the real concrete start came in 2024, with the core administrative regulation put in place, translating the vague and conceptual language into concrete and enforceable detailed rules.
The blocking rules and the anti-foreign sanctions law were the first offensive tool, where China can take concrete action towards companies to make sure that they protect Chinese entities from foreign sanctions, and sanction those who implement these foreign sanctions. In 2023 and 2024, the first steps were taken to restrict certain critical minerals such as gallium and germanium. This sped up in late 2025 and 2026, when the U.S. became aggressive in enforcing policy, and in the April-June period last year, there was a very intense escalation between U.S. measures and China matching them, where the U.S. was mainly aiming at tariffs and China putting more emphasis on export restrictions. Some things were suspended later on when there was a bit of a cooling down.
There is now a decree that became effective on July 1, looking into investments outside of China to protect their R&D. In the past, Western countries wanted to protect IP and R&D activities from China getting access or becoming Chinese property, and you see that actually the inverse starts happening, because China really caught up and actually took a lead in a number of industries where now the Western world is following to a certain extent.
Matteo Bianchi, PwC Manager in Export Controls & Sanctions, said that a lot of things are still happening, making this legal framework very complex to navigate. The anti-foreign sanctions law, that was enacted in June 2021, made compliance with foreign sanctions potentially illegal under Chinese law. It authorizes the Chinese government to impose measures, such as sanctions, asset freezes, transaction bans, and other kinds of limitations on trade on foreign individuals and entities that discriminate, or put in place restrictive measures against Chinese citizens and organizations. Implementation is critical here, because it doesn't just target government officials who design the sanctions, but targets the private companies that are going to implement them because they are subject to those laws. In the sphere of sanctions, there is the unreliable entity list, which is common in every country, listing companies and individuals that are subject to certain prohibitions and restrictions, not just from a financial point of view, but also from a trade perspective. In 2025, there was a huge spike of entities mostly related to the aerospace and defense sectors in the U.S., but also companies in other industries. In April 2026, even European companies in the defense and aerospace sector were included in this list.
How does this impact European companies? Companies that are dealing with China need to understand and know the business partners with whom they are doing business, because this may have an impact. Very relevant when talking about Chinese export controls are critical minerals. Extraterritoriality means that a country asserts legal authority over conduct that occurs outside its own border. Normally a country's law applies only within its own territory, but when a regulation has an extraterritorial niche, it claims the power to regulate what foreign companies or individuals do in other countries. With extraterritoriality, China's export control would not just stop at the Chinese border. This was already in place in the U.S., where export controls and sanctions have extraterritorial application.
Extraterritoriality involves products that may have been produced outside of China, but contain a certain amount of Chinese-originated content or technologies of Chinese origin. If for example you are a manufacturer of electric vehicle motors, you may use magnets that may be manufactured by your German supplier, who is using rare earth materials that are sourced from China. So you have a German supplier that is processing these materials to produce the magnets and delivering them to you and you are incorporating the magnets in these motors. Under announcement 61, because you are producing something that contains a certain amount of materials of Chinese origin, you may need an export license from a Chinese perspective when you are exporting the item that you are producing. You need to pay attention to the content of the product that you are producing and the materials that you are using to see what is their origin and how this may trigger Chinese export control. If you are making something outside of China that is using a technology that has been licensed from a Chinese source, the products that you are making outside of China, may still trigger Chinese export controls and if you export them, you may need an export license from a Chinese perspective.
Regarding the unreliable entity list, if you are a European equipment manufacturer sourcing Chinese components that you are integrating in the equipments that you are making, but some of your customers are on the unreliable entity list, you have to be careful, because you may be non-compliant from a Chinese perspective, because materials that are controlled under the Chinese export control regulation were sold to a company that from the Chinese perspective should not have access to those materials. The level of complexity is very significant, not just for sectors that are most commonly related to such kind of discussion, like defense and aerospace, or the hot topics such as semiconductors, electric vehicles, and rechargeable battery materials, but also the impact on the financial institutions that are working directly and indirectly with China.
The administrative burden to obtain an export license in China is very heavy, not just the lengthy process, but also the level of detail and information required. The question that you need to ask is, first of all, if your product is containing materials of Chinese origin or has been produced with technology originated in China, and who is going to receive it? Who is going to be the business partner, your client, your supplier, and last but not least, for which purpose will the product be used for? The U.S. is explicitly targeting China from different angles, not just the Chinese military industrial context, but all the entities in aerospace and defense, those that are supplying technology to this sector, and companies that, for example, are related to sanctions on Russia and Iran. You may be in a situation where the U.S. agency that maintains U.S. sanctions law is saying not to transact with certain Chinese entities because they are on the sanction list, but on the other side in China, MOFCOM may say do not refuse to transact with these entities because this is in violation of the law. So either way you go, you may violate one or the other.
Giovanni Gijsels added that one big difference is that European rules do not apply extraterritorially, except that subsidiaries need to follow the rules in the country where they are located. If you export a certain product and you re-export it to the next destination, what happens afterwards is no longer the concern of European legislation. What is surprising is how many companies don't know their actual trade data, they don't know what they are importing, what the amount of duties are that they are paying, and where the dependencies are in the supply chain. Some software have a U.S. classification and if you use that software to make something, your product might be subject to U.S. rules and there may be export restrictions to China. You need to know where you are sourcing and where you are selling. Knowing what you're doing doesn't make you immune to sudden changes, but it makes you more adaptable.
Takeaways:
• China export controls are expanding and are actually being enforced.
• The extraterritorial reach is growing.
• You can do the business, but you need to be aware of the restrictions, vulnerabilities and alternatives.
• With all these rapid changes, it is very easy to get lost, but practical steps are the answer.
A Q&A session concluded the webinar. Q.: Does the EU also have mandatory requirements in legislation for companies to do value chain mapping or is it more a recommendation? Mr. Gijsels: To a certain extent it’s voluntary, but you do need to take steps to identify the parties that you're working with. Q.: Is there any license monitoring platform for EU companies to consult? Mr. Bianchi: There is the EU sanctions map that has an overview of all the measures and there are market databases that can give quite some insight, mainly from the European perspective. If you are importing from China, there won’t be any information.
The EU’s Market Access Database is now part of Access2Markets, the European Commission’s trade portal for exporters and importers. You can use it to find tariffs, import procedures, product requirements, trade barriers, and trade statistics for non-EU markets. Access here: Access2Markets.
The links below are potential sources for information mainly on EU outbound movements.
• https://www.sanctionsmap.eu/#/main
• https://trade.ec.europa.eu/access-to-markets/en/my-trade-assistant
