China's Extraterritorial Application Provisions — MOFCOM Announcements No. 61 and No. 62, the 0.1% Rule, and the 50% Rule

Hello, this is Ryuta Hamamoto from TIMEWELL. MOFCOM Announcements No. 61 and No. 62, issued on October 9, 2025, were the first full-scale operation of extraterritorial application in Chinese export control. On floors that handle rare-earth procurement and NdFeB magnets, "0.1% rule" and "50% rule" arrived together. Confusion followed, and I still hear the same questions.

This article lines up the original MOFCOM announcements with commentary from Japan's METI, CISTEC, JETRO, and others, inside the same sovereign export-control frame as the U.S. EAR and Japan's FEFTA. I avoid interpretive labels such as "Chinese FDPR" or "retaliation" and stay with facts and functional structure.

Apply this to your own transactions, one at a time: A fill-in working sheet that screens a single China-related transaction against China's export-control regime (the Export Control Law and the Dual-Use Items Export Control Regulations), the controls on critical minerals (gallium, graphite, rare earths and others), and the four counterparty-list systems (Control List, Watch List, Unreliable Entity List, countermeasure list). It is not a roster of who is listed but a procedure for what to confirm before a shipment, including whether extraterritorial application and re-export (Article 49 of the Dual-Use Regulations) could reach the transaction. Use it as the written record of your review, or as the draft you work from when you explain those checks to a customer (listing is a regulatory designation, not a judgment of the company). → Download the China-Related Transactions Screening Sheet (Free. Your company name and work email address are required.)

What You Will Get From This Article

• The relationship between Article 49 of China's Dual-Use Export Control Regulations and Announcements No. 61 and No. 62
• The content of the 0.1% rule (Chinese de minimis) and the 50% rule (Chinese Affiliates Rule)
• Functional symmetry with the U.S. EAR (FDPR, de minimis, Affiliates Rule)
• Meaning of the temporary suspension under Announcement No. 70 of November 7, 2025 (through November 10, 2026)
• Five practical steps Japanese companies handling NdFeB magnets or EV traction motors should check

Three Terms to Learn First

Chinese announcement texts quote many statutory articles. Without the terms, they are hard to parse. Three minimum terms:

1. Extraterritorial application. A mechanism by which a country's laws apply to conduct outside that country's territory. Also called "long-arm jurisdiction." The United States, the EU, Japan, and China each adopt it with different scope and conditions. It is not a rare idea in export control. For China, Article 49 of the Dual-Use Export Control Regulations (effective December 2024) is the governing provision.

2. De minimis. Latin for "of minimal things." In export control, a threshold rule that excludes application when domestic-origin parts or technology fall below a certain share. The U.S. EAR uses 25% in general, 0% for certain semiconductors, and Announcement No. 61 uses 0.1% on a value basis. Thresholds differ by item.

3. 50% rule (Affiliates Rule). List controls automatically extend to subsidiaries and affiliates in which a listed company holds 50% or more ownership. U.S. BIS introduced it in September 2025; China introduced a parallel version in October of the same year. Both have been temporarily suspended since November 2025.

Content of Announcement No. 61 (Goods) and No. 62 (Technology)

On October 9, 2025, MOFCOM issued six rare-earth-related announcements at once (Nos. 55, 56, 57, 58, 61, and 62). The lead roles here are No. 61 (goods) and No. 62 (technology): the first full-scale operation of extraterritorial application.

Announcement No. 61: Three Control Types

No. 61 classifies rare-earth-related items manufactured outside China into three types.

Type	Target	Threshold	Planned effective date (pre-suspension)
Type 1	Items manufactured outside China that "contain, integrate, or mix" Chinese-origin controlled rare earths	0.1% or more on a value basis	December 1, 2025
Type 2	Items manufactured outside China using Chinese-origin rare-earth production technology	No threshold (0%)	December 1, 2025
Type 3	Reexport of Chinese-origin controlled rare-earth items themselves	—	October 9, 2025 (immediate)

In short: third-country products containing 0.1% or more Chinese-origin rare earths, and third-country products made with Chinese-origin rare-earth production technology, become MOFCOM export-license targets.

Announcement No. 62: Technology, Media, and Support Conduct

No. 62 controls the foreign transfer of rare-earth-related technology and media embodying technology (drawings, data, software, and similar). Specific domains include:

• Technology for rare-earth mining, separation and refining, metal smelting, magnetic-materials production, and secondary-resource recycling
• Technology for assembly, adjustment, maintenance, repair, and upgrade of related production lines
• "Substantial support or cooperation" by Chinese citizens, legal persons, or unincorporated organizations, without a license, for the above activities outside China

For technology, no de minimis threshold is set. If Chinese-origin technology is used, the item is in scope regardless of value share.

The 0.1% Rule (Chinese De Minimis)

The core of No. 61 is a threshold rule: in "individually usable products," Chinese-origin controlled rare earths at 0.1% or more of value put the product in scope.

Comparison	China Announcement No. 61	U.S. EAR de minimis	U.S. EAR FDPR
Threshold	0.1% (value basis)	25% (general) / 10% (Country Groups E:1, E:2) / 0% (certain semiconductors, etc.)	No threshold (use of U.S.-origin technology itself is the requirement)
Calculation	Value basis	Value basis	Origin presence, not calculation
Target	Foreign-made products containing Chinese-origin rare earths	Foreign-made products containing U.S.-origin content	Foreign-made products made with U.S.-origin technology or software

Do not simply compare "0.1% is 250 times stricter than 25%." I see that math a lot, and it misleads. The United States also uses 0% de minimis (effectively equivalent to FDPR) for China-bound semiconductor controls, and the target items differ. The same "value-based threshold" means very different things depending on which items and for what purpose it is set.

The 50% Rule (Chinese Affiliates Rule)

No. 61 also introduced a rule under which list controls automatically extend to subsidiaries and branches in which a Control List (or Watch List) company holds 50% or more ownership.

Comparison	China 50% rule	U.S. BIS Affiliates Rule (50% rule)
Introduction	October 9, 2025 (Announcement No. 61)	September 2025 (BIS)
Ownership threshold	50% or more	50% or more
Effect	License applications subject to "presumptive denial"	Entity List effect automatically extends to subsidiaries
Current status	Temporarily suspended November 7, 2025 – November 10, 2026	Temporarily suspended for the same period

The current picture is that the United States and China introduced parallel rules at nearly the same time and, under a U.S.–China understanding, suspended them for the same period.

Why Article 49's "First Full-Scale Operation" Matters

To place Announcements No. 61 and No. 62 in time, a short map of China's export-control architecture helps.

• December 2020: Export Control Law of the PRC takes effect (extraterritorial basis already exists in the text)
• December 1, 2024: Dual-Use Export Control Regulations take effect (Article 49 fleshes out extraterritorial application)
• October 9, 2025: Announcements No. 61 and No. 62 first operationalize Article 49 in concrete form

The "article" of Article 49 existed from December 2024. The concrete announcement of which items, at which thresholds, how applied, did not appear until October 2025. Nos. 61 and 62 are the first full-scale implementation case of that article.

Article 49's extraterritorial reach can be organized as three points:

1. Conduct by Chinese citizens, legal persons, or unincorporated organizations outside China
2. Transfer or provision by foreign organizations or individuals, to third countries, of products containing Chinese-origin items or technology
3. Conduct that harms China's national security and interests

Nos. 61 and 62 are the first full-scale operational cases of (2). Against the U.S. EAR's history since 1959, Chinese extraterritorial application is still developing in both text and practice — a fair reading.

Structural Comparison with the U.S. EAR: Functionally Symmetrical Regimes

The U.S. EAR has three representative extraterritorial mechanisms. China's Announcements No. 61 and No. 62 can be read as a functionally parallel structure.

U.S. EAR	Mechanism	Chinese counterpart concept
FDPR (Foreign Direct Product Rule)	Treats products manufactured outside the United States using U.S.-origin technology or software as U.S.-controlled	Announcement No. 62 "foreign manufacture using Chinese-origin technology" (Type 2)
De minimis (25% / 10% / 0%)	Treats products containing U.S.-origin parts or technology above a threshold as controlled	Announcement No. 61 "0.1% rule" (Type 1)
Affiliates Rule (50% rule)	Automatically extends Entity List effect to 50%-or-more subsidiaries	Announcement No. 61 "50% rule"

Important: the two regimes are functionally parallel, but purpose, operating culture, and transparency design differ. The United States has case law and operational accumulation since 1959 and a thick EAR body and FAQ updated roughly every six months. China only made extraterritorial basis explicit in the 2024 regulations, so operational Q&A and past cases are still thin.

EU Regulation 2021/821 (Annex I) and Japan's FEFTA also have limited extraterritorial effects. "Extraterritorial application equals a peculiarly Chinese regime" is inaccurate. Major export-control systems share this function.

Temporary Suspension Timeline (Announcement No. 70, Through November 10, 2026)

Nos. 61 and 62 were issued on October 9, 2025 and then suspended early after U.S.–China talks. Timeline:

2024 Dec  1  Dual-Use Export Control Regulations take effect (Article 49 extraterritorial basis)
2025 Apr       Medium/heavy rare-earth export licensing (individual announcements)
2025 Oct  9  Announcements Nos. 55–58, 61, 62 issued together
              — No. 61: rare-earth items manufactured outside China (0.1% / 50% rules)
              — No. 62: rare-earth-related technology
2025 Oct 30  U.S.–China summit (Korea / APEC)
2025 Nov  1  China indicates intent to partially suspend export controls
2025 Nov  7  Announcement No. 70 issued
              — Temporarily suspends implementation of Nos. 55, 56, 57, 58, 61, 62
              — Suspension period: November 7, 2025 – November 10, 2026
2026 Nov 10  Planned end of temporary suspension (extension / permanentization / expiry all undetermined)

A common misunderstanding is "suspension equals withdrawal." Announcement No. 70 temporarily suspends implementation of the six announcements including Nos. 61 and 62. The legal instruments themselves remain valid. The U.S. BIS Affiliates Rule is suspended for the same period; the current picture is parallel suspension of both measures.

For practitioners, the key is simpler: treatment after November 10, 2026 is undetermined. Depending on U.S.–China talks, extension, permanentization, or expiry are all possible.

Impact on Japanese Companies

Even during the suspension period, Japanese companies should push supply-chain visibility. Three issues:

NdFeB Magnets and EV, Industrial Motors, Wind, MRI Domains

China accounts for most of the world's rare-earth production and separation/refining, and Chinese-origin material also dominates feedstock for NdFeB magnets (neodymium-iron-boron permanent magnets). EV traction motors, industrial high-torque motors, wind turbines, MRI, industrial robots, and defense equipment are typical domains that use Chinese-origin rare earths.

When these products are manufactured in Japan and exported to the United States, Europe, or third countries, post-suspension MOFCOM export-license applications may be required.

Japanese Companies with Chinese Subsidiaries (50% Rule)

In February 2026, China placed a total of 40 Japanese companies and organizations on dual-use Export Control List and Watch List. List placement is a regulatory designation, not a moral judgment on those entities. If the 50% rule is operating, subsidiaries in which a listed company holds 50% or more ownership automatically become the same control targets.

When a Japanese company operates joint ventures or subsidiaries in China, regularly confirming that local partners and investors do not appear on Control List or Watch List is basic risk management.

Companies Handling Technology and Know-How (No. 62)

Cases in which rare-earth refining/separation technology or magnetic-materials manufacturing technology is obtained in China and operated in a third country fall within No. 62's reach. "Substantial support or cooperation" by Chinese engineers outside China is also in scope. When signing technology contracts, license contracts, secondment contracts, or consulting contracts, clarify technology origin and transfer destination.

Five Practical Steps

Even during the suspension period (through November 10, 2026), these five steps make post-suspension response much easier. If I had to pick one, start with supply-chain visibility.

1. Supply-chain visibility

Inventory where and to what extent Chinese-origin rare earths and Chinese-origin technology appear in your products. NdFeB magnets, heavy rare earths such as Dy, Tb, and Gd, and modules incorporating rare-earth permanent magnets are representative targets. List items at 0.1% or more on a value basis.

2. Compliance-notice management

Announcement No. 61 requires Chinese exporters to issue a "compliance notice" to buyers. As buyers, Japanese companies should confirm whether past, present, and future Chinese-origin rare-earth procurement contracts include such notices.

3. Secure alternative sources

A value-based 0.1% is an extremely low threshold. Continuing Chinese-origin rare earths after suspension ends raises license-application burden. Run U.S., Australian, and European alternatives (MP Materials, Lynas, Arafura, Iluka, and others), recycled materials, and magnet-free design in parallel.

4. 50% check on Chinese subsidiaries and local partners

For Chinese subsidiaries and joint ventures, check at least once a year: your ownership ratio, local partner background, and whether the local partner has investment from other Control List companies.

5. Monitor the latest announcements

MOFCOM announcements issue irregularly. Watch METI, JETRO, CISTEC commentary, and alerts from major law firms such as White & Case and Jones Day. Raise update frequency as the suspension end date (November 10, 2026) approaches.

Common Misconceptions / FAQ

Q1. May we call this the "Chinese FDPR"?

A. Functional similarity leads general media to use that label, but strictly it is not accurate. U.S. FDPR logic is "use of U.S.-origin technology automatically puts the product in scope," with no de minimis threshold. China's Announcement No. 61 combines a threshold type ("0.1% or more Chinese-origin rare earths") and an origin type ("use of Chinese-origin technology"). I stick to the neutral term "China's extraterritorial application provisions."

Q2. Does 0.1% mean 250 times stricter than the U.S. 25%?

A. That simplification does not hold. The U.S. EAR also uses 0% (no de minimis) for some items; for China-bound semiconductor controls, the effective threshold is near zero. China's 0.1% is a threshold set for the specific domain of rare earths; the U.S. 25% is a general default rule. You cannot rank "which is stricter" by the number alone.

Q3. If it is suspended now, can we ignore it?

A. No. The legal instruments remain valid; only implementation is temporarily suspended through November 10, 2026. Given the possibility of resumption after suspension ends, and the de facto need for supply-chain visibility even during the suspension, compliance posture should be maintained.

Q4. If a Japanese company exports magnets using Chinese-origin rare earths to the United States, what happens?

A. During the suspension period (through November 10, 2026), export without a MOFCOM license is possible. After suspension ends, if Chinese-origin rare-earth value in the magnet is 0.1% or more, a MOFCOM export-license application may be required. The practical recommendation is to advance supply-chain visibility, alternative sources, and compliance-notice management before suspension ends.

Q5. How does the 50% rule apply in practice?

A. Example: Company A is on China's Control List and holds 60% of subsidiary Company B. Even if B is not explicitly listed, B is treated equivalently to A, and dual-use export-license applications face presumptive denial. Japanese companies with Chinese subsidiaries should confirm that local partners and investors do not appear on Control List or Watch List.

Q6. Does Japan's FEFTA have a similar regime?

A. Japan's FEFTA is principally territorial; extraterritorial reach is more limited than China's or the United States'. Catch-all (complementary export controls) can still bring non-list items into licensing where WMD or conventional-weapons concern exists. EU Regulation 2021/821 also has catch-all provisions and limited extraterritorial effect for cyber-surveillance technology and similar.

Latest Developments as of July 2026

While temporary suspension of Announcements No. 61 and No. 62 continues (through November 10, 2026), countries are hedging against single-country dependence on Chinese rare-earth supply. The 16th Japan–India annual summit on July 2, 2026 produced a joint declaration on economic-security cooperation, citing investment on the order of about 2 trillion yen across five fields: semiconductors, critical minerals (rare earths), clean energy, ICT (subsea cables), and pharmaceuticals (Japan–India summit (Prime Minister's Office of Japan, July 2026)). Chinese-origin rare-earth license applications may return after suspension ends, so source diversification is continuous with the practical task of securing alternative routes. Related issues are in the Japan–India summit and economic security.

Summary

If you only act on one thing before November 10, 2026, finish a Chinese-origin rare-earth and technology map for your main products. The rest of the picture:

• MOFCOM Announcements No. 61 and No. 62 are the first full-scale operation of Article 49 of the Dual-Use Export Control Regulations (effective December 2024)
• No. 61 introduces the 0.1% rule (Chinese de minimis) and the 50% rule (Chinese Affiliates Rule); No. 62 controls extraterritorial transfer of rare-earth-related technology
• The structure is functionally parallel to the U.S. EAR's FDPR, de minimis, and Affiliates Rule, but Chinese operational accumulation and transparency are still developing
• Under Announcement No. 70 of November 7, 2025, the six announcements including Nos. 61 and 62 are temporarily suspended through November 10, 2026 (suspension is not withdrawal)
• Even during the suspension, companies handling NdFeB magnets, EV traction motors, and similar should advance supply-chain visibility, compliance-notice management, and alternative sources

The relationship between China's Export Control Law and the designation of 40 Japanese companies is covered in Complete Guide: Structure of China's Export Control Law and the Designation of 40 Japanese Companies; the full rare-earth control map is in China Rare Earth Export Control Map; and the relationship to counter-legislation such as the Anti-Foreign Sanctions Law is in Complete Guide: China's Export-Control Counter-Legislation and Extraterritorial Application.

Introducing the Export-Control AI Agent TRAFEED

Teams need to watch Chinese, U.S., EU, and Japanese export-control regulation at once, and determine whether products fall under Announcement No. 61 Types 1–3, U.S. EAR FDPR or de minimis, or Japan's FEFTA catch-all. That field need is what TRAFEED (formerly ZEROCK ExCHECK) (TRAFEED service catalog (PDF)) is built for.

Aligned with METI security trade control standards and multilingual (Japanese, English, Chinese, German), it cross-analyzes MOFCOM announcement originals, U.S. BIS rules, and Japan's Goods Ordinance, matches them against internal supply-chain data, and visualizes items and counterparties that need a closer look. Use it for posture-building during the suspension and for faster response after November 10, 2026.

For introduction inquiries, use the contact form.

References

Chinese Government Official

• MOFCOM (English portal): http://english.mofcom.gov.cn/
• MOFCOM Announcement 2025 No. 61 original (PDF): http://interview.mofcom.gov.cn/mofcom_interview/front/opdata/downlodePdfNew?id=439da9350b8d439cba2b9f0ed57a1de6
• CSET Georgetown English translation and commentary on No. 61: https://cset.georgetown.edu/publication/mofcom-notice-2025-61/

Japanese Public Bodies and Industry Associations

• METI, "On Temporary Suspension of Chinese Export Control Measures" (via JSIA): https://jsia.or.jp/
• JETRO Business Brief, "China Places 40 Japanese Companies and Organizations on Export Control List and Watch List" (February 2026): https://www.jetro.go.jp/biznews/2026/02/e4f19a798abdc080.html
• CISTEC, "On China's Strengthening of Export Controls on Rare-Earth-Related Goods and Technology" (October 9, 2025): https://www.cistec.or.jp/service/keizai_anzenhosho/china/data/20251009.pdf
• Council of Local Authorities for International Relations, official gazette translation of MOFCOM Announcement 2025 No. 61: https://www.jicc.org/kanpou_file/20251010_china_04.pdf
• CLAIR official gazette translation of MOFCOM Announcement 2025 No. 62: https://www.jicc.org/kanpou_file/20251010_china_03.pdf

Major Law-Firm Commentary

• Anderson Mori & Tomotsune, "Analysis of Rare-Earth Control Announcements Under the PRC Export Control Law and Impact on Japanese Companies": https://www.amt-law.com/asset/pdf/bulletins5_pdf/251016.pdf
• Akasaka International Law & Accounting Office, "MOFCOM Announcement 2025 No. 61: Decision on Implementing Export Controls on Foreign-Related Rare-Earth Items": https://ailaw.co.jp/blog/post16893/
• White & Case, "China imposes extraterritorial jurisdiction and a 50% Rule for export controls on rare earth elements and other items": https://www.whitecase.com/insight-alert/china-imposes-extraterritorial-jurisdiction-and-50-rule-export-controls-rare-earth
• Jones Day, "BIS Suspends Affiliates Rule, China Pauses Rare Earth Export Controls" (November 2025): https://www.jonesday.com/en/insights/2025/11/bis-suspends-affiliates-rule_china-pauses-rare-earth-export-controls
• Mayer Brown, "PRC Announces New Export Controls on Rare Earth and Battery Materials and Technology": https://www.mayerbrown.com/en/insights/publications/2025/10/prc-announces-new-export-controls-on-rare-earth-and-battery-materials-and-technology

Comparison with the U.S. EAR and FDPR

• 15 CFR §734.4 De minimis U.S. content: https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-734/section-734.4
• CISTEC, "Q&A on EAR Reexport Controls": https://www.cistec.or.jp/service/uschina/12-ear_qa.pdf