"China's Export Controls Related to the Wassenaar Arrangement, Limited Impact on Domestic Industry"

Hana Securities evaluated on the 7th that the impact on South Korea of China's official export controls on products likely to be used for military purposes related to the defense and shipbuilding industries under the Wassenaar Arrangement would be limited.

The Chinese government has formalized export controls on military-use products based on the Wassenaar Arrangement starting next month. The sanctions cover mold equipment and software in the aerospace and shipbuilding sectors, as well as ultra-high molecular weight polyethylene fibers.

Wigyeongjae, a researcher at Hana Securities, explained, "The Wassenaar Arrangement involves export controls on weapons and dual-use items related to non-weapon of mass destruction (WMD) purposes," adding, "Since the Chinese government's measures target materials and parts likely to be used for military purposes rather than conventional weapons themselves, the interpretation of export controls on dual-use items related to non-WMD under the Wassenaar Arrangement is important." He continued, "It is appropriate to interpret mold equipment in the aerospace and shipbuilding sectors as belonging to the materials processing category," and noted, "According to the dual-use item classification table within the Wassenaar Arrangement, it is entirely possible to control exports of these items."

However, the impact of China's control measures on the domestic industry is expected to be limited. Researcher Wi said, "The scope of many controlled mold equipment items is narrow," and added, "In the defense sector, the dependence on China is presumed to be very low due to ongoing efforts toward localization, and although some blocks are imported from China in the shipbuilding industry, those items are not subject to the Wassenaar Arrangement." He concluded, "While export control measures represent a significant decision amid escalating global geopolitical conflicts, the impact of this measure is expected to be minimal."

This content was produced with the assistance of AI translation services.