China Restricts Rare Earth Exports: Latest Updates

China Imposes New Export Controls on Rare-Earth Minerals

The competition to develop increasingly advanced semiconductors is escalating, and China has responded by implementing further export controls. These controls target rare-earth minerals, alongside the technologies used for their mining and processing.

Expanded Control List

China’s Commerce Ministry announced on Thursday the addition of five more rare-earth elements to its existing export control list. This brings the total number of controlled elements to twelve. The stated purpose of these measures is to protect China’s national security interests.

A new export licensing requirement has been established. Any foreign entities intending to export products containing even trace amounts of Chinese-sourced rare-earth minerals, or utilizing Chinese technology for their extraction, will now be required to obtain a license.

Licensing Restrictions and Exemptions

Export licenses will be denied to defense-related organizations. However, companies seeking to utilize these minerals in the production of semiconductors will be subject to individual case-by-case reviews for licensing approval.

Certain exports will be exempt from these new licensing requirements. This includes materials destined for humanitarian purposes, such as responses to public health crises and disaster relief efforts.

Strategic Leverage and Global Impact

As the dominant global producer of rare-earth minerals, China has consistently utilized its position to influence international negotiations. This is particularly evident in its interactions with the United States, which has recently signaled intentions to broaden restrictions on the export of chipmaking equipment and chips to China.

Rare-earth minerals are essential components in numerous industries. These include the manufacturing of solar panels, electric vehicle batteries, semiconductors, and aerospace technologies.

Reciprocal Measures and Historical Context

China’s latest restrictions are a direct response to the U.S.’s Foreign Direct Product rule. This rule, expanded by the Biden administration last year, aims to curtail the export of chipmaking equipment from foreign nations to China.

The current announcement follows an earlier action in April, when Beijing added several rare-earth minerals to its control list. This move was in retaliation for tariffs imposed during the Trump administration, and it initially triggered a significant global supply shortage.