Listed Chinese refractories producer Punai Group (002225.SZ) has confirmed it received an indictment from the Yingkou City People’s Procuratorate in Liaoning Province, alleging that the company and a logistics subsidiary smuggled natural flake graphite out of China to its wholly-owned overseas subsidiaries (including PRCO USA Inc. in the United States) by misdeclaring HS codes on customs paperwork to evade the country’s dual-use export licensing regime.
According to the company filing, prosecutors allege that 1,243.55 tonnes of natural flake graphite were illegally exported between April 2024 and March 2025, with a total declared customs value of approximately CN¥5.98 million (US$875,000).
The graphite was destined for use as raw material in the production of magnesia-carbon bricks which are refractory linings used in steel-making.
The case
The prosecution names two corporate defendants: Punai Group itself and its subsidiary Yingkou Wanhua Logistics Development Co., Ltd., alongside four individuals.
Prior to October 2023, Punai had consistently declared its natural flake graphite exports under HS code 2504101000, the tariff line for natural flake graphite. From November 2023, the month after MOFCOM and Customs announced the new export controls, exports were instead declared under HS code 2504109900, covering “other powdered natural graphite,” a line that does not require an export licence under either the pre- or post-control framework. Between April 2024 and March 2025, a total of 1,243.55 tonnes were exported under the latter code, of which 890.80 tonnes were routed through Wanhua Logistics. All goods were shipped to Punai’s wholly-owned overseas subsidiaries.
Following an investigation by the Bayuquan Customs Anti-Smuggling Sub-bureau, the four named individuals were arrested between May and September 2025. The case has been filed under China’s criminal provisions covering the smuggling of goods whose import or export are prohibited or restricted by the state.
This appears to be one of the first publicly disclosed criminal indictments under China’s October 2023 graphite export control framework.
It also raises the regulatory cost of operating in the grey market for Chinese exporters who continue to ship without proper authorisation.
Background: China’s October 2023 graphite export controls
The case relates to enforcement of the “Announcement on Optimising and Adjusting Temporary Export Control Measures for Graphite Items,” jointly issued by China’s Ministry of Commerce (MOFCOM) and the General Administration of Customs on 20 October 2023.
The announcement, which took effect on 1 December 2023, placed a defined list of graphite products under China’s dual-use export licensing regime and replaced the earlier 2006 No. 50 Announcement that had governed graphite export controls. Under the framework, exporters operating without a valid licence, exceeding licence scope, or otherwise violating the regulations face administrative penalties from MOFCOM or customs authorities. Where the conduct meets the threshold for a criminal offence, prosecutors can pursue criminal liability under the relevant provisions of the Criminal Law.
Sources
Company filing: Punai Group (濮耐股份, 002225.SZ), indictment disclosure announcement, Shenzhen Stock Exchange, April 2026.
Regulatory: Ministry of Commerce of the People’s Republic of China and General Administration of Customs, “Announcement on Optimising and Adjusting Temporary Export Control Measures for Graphite Items” (《关于优化调整石墨物项临时出口管制措施的公告》), 20 October 2023, effective 1 December 2023.
Predecessor measure: MOFCOM, State Administration of Science, Technology and Industry for National Defense, and General Administration of Customs Announcement No. 50 of 2006 (“Decision to Implement Temporary Export Control Measures on Graphite-Related Products”), repealed effective 1 December 2023.
Note: All CNY figures converted to USD at an approximate rate of 1 USD = 6.84 CNY as of 26 April 2026.
