Based on publicly available information, this Insight distinguishes the conventional administrative-enforcement track from the criminal proceedings in the present case and considers the “boundary between administrative penalties and criminal liability” through China’s published judicial record.
When Do China’s Export Control Violations Become Criminal Cases?
On 27 August 2026, during a meeting with a cross-party delegation of Japanese lawmakers visiting China, Lu Kang, Vice Minister of the International Department of the Communist Party of China Central Committee, was reported to have said that the Chinese government would not change its policy toward Japan unless Japan changed its position on Taiwan. At the same meeting, the Japanese side called for the removal of export restrictions on rare earths and other items and for the early release of Japanese nationals detained by Chinese authorities.
In current Japan-China relations, export controls and the detention of Japanese nationals have both become diplomatic issues. How, then, are China’s export controls actually being enforced in practice?
Of the 670 China Customs administrative enforcement cases related to dual-use controls collected and organized by WTS Institute, 20 could be confirmed from original source materials as involving Japan as a destination. All 20 were handled through administrative penalty decisions or formal no-penalty decisions; none was processed as a criminal case.
In 2026, however, the Japanese government disclosed that China had informed it that two Japanese nationals detained in Dalian were suspected of conduct falling under the offense of “smuggling goods prohibited from import or export by the State.” Multiple news reports identified the two as employees of the Fuji Electric group and subsequently reported that they had been formally arrested.
The Japanese government’s official explanation did not identify the company, and Chinese authorities have not publicly disclosed full details concerning the goods involved or the specific alleged conduct. This Insight does not make any finding as to whether unlawful conduct occurred or as to the responsibility of any party in what has been reported as the “Fuji Electric Group employee arrest case.”
The Legal “Track” Is Different from the 20 Japan-Bound Cases
Of the 20 Japan-bound cases identified by WTS Institute, 16 were handled within the Shanghai Customs jurisdiction. Thirteen were rare-earth-related, including 12 involving magnets or magnetic components. The outcomes were 13 penalty decisions involving fines and seven no-penalty decisions.
In other words, the Japan-related enforcement visible in the published record to date has primarily consisted of administrative enforcement: Customs inspection, confirmation of products and constituent elements, findings concerning licensing or declaration issues, and ultimately an administrative penalty or no-penalty decision.
By contrast, the offense communicated by the Japanese government in the present matter is a criminal smuggling offense. This is not simply a “21st Japan-bound enforcement case.” In WTS Institute’s existing data, the matter should be understood as having entered a criminal-proceedings track that differs from the prior pattern of Japan-bound administrative enforcement. The location also differs: Dalian rather than Shanghai, where the earlier Japan-bound cases were concentrated.
Criminal Liability for Foreign Nationals Is Not Unprecedented
There are prior cases in which foreign nationals have been held criminally liable in China for export-control violations.
In one earlier case identified by WTS Institute, a foreign-national de facto operator doing business in China attempted to export controlled chemical equipment under a different product description. The company and multiple individuals were held criminally liable.
| First instance | Nanjing Intermediate People’s Court, (2015) Ning Xing Er Chu Zi No. 18 |
|---|---|
| Second instance | (2015) Su Xing Er Zhong Zi No. 51 |
| Retrial review | Jiangsu High People’s Court, (2016) Su Xing Shen No. 261 |
| De facto operator | 3 years’ imprisonment + RMB 400,000 fine + deportation |
A notable feature of this case is that the first-instance judgment itself was not published. Global Law Office (环球律师事务所), a Chinese law firm, has explained that the first-instance criminal judgment was withheld from publication because it “involved state secrets.” The second-instance criminal ruling could likewise not be located through public searches. The firm therefore reconstructed the matter from the retrial-review decision, (2016) Su Xing Shen No. 261, and publicly available records by the prosecutor who handled the case.
WTS Institute likewise does not treat this case as one verified through direct review of the original first-instance judgment. The factual record was reconstructed by cross-checking the retrial-review decision, a prosecutor’s first-person account published by the Supreme People’s Procuratorate, and commentary by Chinese legal practitioners referring to those materials.
The phrase “withheld from publication because it involved state secrets” refers to the explanation for non-publication given in the Chinese legal commentary that could be confirmed. WTS Institute is not characterizing the entire matter itself as a “state secrets case.”
The case is also roughly a decade old and arose under a different institutional and political environment. It cannot be read as meaning that “because the earlier defendant received three years, the present case will also result in three years.” The value of the earlier judicial record is not that it predicts a specific sentence, but that it provides comparative evidence of the types of conduct that may cross the line from administrative enforcement into criminal liability.
What Matters Is Not Only “What Was Exported”
A cross-case review of published Chinese criminal judgments shows that case assessment may depend not only on the goods themselves, but also on circumstances such as the following:
- Quantity and value of the exports
- Whether the conduct was isolated or repeated and continuing
- Misdescription of product names, HS codes, destinations or other declaration elements
- Routing, concealment or other measures designed to circumvent controls
- Decision-making and division of roles within an organization
- Knowledge that the goods were controlled
- Post-detection conduct, including voluntary surrender, acknowledgment of facts, remorse, and a subordinate role
In the published judgments compared by WTS Institute, scale, organizational structure, the planning and repetition of disguise or circumvention, and conduct after detection all emerge as important dimensions in how cases are assessed.
Companies also need records of what was known, what was declared, and how the goods were exported.
What Can Be Said About the Fuji Electric Group Employee Arrest Case at This Stage
Based on the public information currently available, the present matter has advanced to the criminal-proceedings stage, unlike the 20 Japan-bound administrative enforcement cases identified by WTS Institute to date.
At the same time, the following points cannot currently be determined conclusively:
- Whether the individuals will ultimately be prosecuted
- What specific facts, if any, will form the basis of prosecution
- The quantity and value of the goods, the number of exports, and the duration of the conduct
- What role each person will be found to have played
- Whether the individuals will be convicted
- If convicted, what sentences will be imposed
Nor can public materials alone establish whether the case is being handled as part of a broader China policy toward Japan or as enforcement against the specific export conduct at issue.
Past judicial records do not predict the outcome of the present case. They are, however, valuable comparative material for understanding the boundary between administrative penalties and criminal liability.
China’s dual-use export controls therefore need to be examined not only through policy measures and control lists, but by connecting Customs administrative enforcement and criminal justice as parts of a single enforcement system.
Related Research
Citation & Use
This Insight is published free of charge. Reasonable quotation for news reporting, research, education, internal corporate materials and similar purposes is permitted provided that the source is clearly identified.
Recommended citation: WTS Institute, “When Do China’s Export Control Violations Become Criminal Cases?”, 27 August 2026.
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Important Notice and Disclaimer
This Insight was independently organized and analyzed by WTS Institute using public materials released by the Chinese and Japanese governments, China Customs administrative enforcement records, published judicial materials and public reporting by news organizations.
The identification of the individuals as Fuji Electric group employees, the timing of formal arrest, the goods at issue, the alleged incorporation of the goods into products, and the alleged intention to extract them after export are based principally on source-based reporting by Kyodo News, Jiji Press and other news organizations. Chinese authorities have not publicly disclosed all details concerning the company name, goods involved or specific alleged conduct.
This Insight does not determine that any party engaged in unlawful conduct and does not provide a legal determination concerning the individual case. The factual record and legal assessment may change as prosecution, trial, judgment or other developments occur.
This Insight does not provide professional advice concerning the permissibility of any specific import or export transaction, legal compliance, investment decisions or other matters. For individual transactions or legal determinations, consultation with appropriate specialists is recommended.
Principal References
- Nikkei: “Chinese Communist Party Official Says Policy Toward Japan Will Not Change Unless Japan Revises Its Position on Taiwan,” 27 August 2026.
- Chief Cabinet Secretary Press Conference, 24 June 2026.
- Ministry of Foreign Affairs of the People’s Republic of China, “Regular Press Conference by Foreign Ministry Spokesperson Guo Jiakun, 24 June 2026.”
- Kyodo News: series of reports on the detention and arrest of Fuji Electric group employees and the suspected rare-earth-related conduct, 24 June–1 July 2026.
- Jiji Press: reports concerning the two Japanese nationals detained in China, 25 June and 1 July 2026.
- WTS Institute, China’s Dual-Use Export Controls | Japan-Bound Trade Edition 2026.