In brief
China has tightened its export rules on rare earths, crucial for technologies like smartphones and electric cars. The new regulations require foreign companies to obtain Chinese government approval for exporting products containing rare earths, while also restricting cooperation between domestic and foreign entities. This move is seen as a tactical response in the context of trade negotiations with the US, coinciding with planned discussions between leaders Xi Jinping and Donald Trump.
China has tightened export controls on rare earths and other materials critical for advanced tech manufacturing as trade negotiations continue with the US.
It processes around 90% of the world's rare earths, which go into everything from solar panels to smartphones - a key bargaining chip ahead of an expected meeting between Chinese leader Xi Jinping and his US counterpart Donald Trump this month.
Beijing had already restricted processing technology and unauthorized overseas cooperation, but Thursday's announcement formalized the rules.
Foreign companies now need the Chinese government's approval to export products with even small amounts of rare earths and must explain their intended use.
The ministry announced similar restrictions on the export of lithium batteries and some forms of graphite, which are also essential components in the global tech supply chain and largely produced in China.
Beijing stated that the regulations are intended to 'safeguard national security'. One of the main targets appears to be overseas defense manufacturers, including those in the US, who rely on rare earths from China.
China had added several rare earths and related materials to its export control list in April, which caused a major global shortage.
The new announcement makes clear that licenses are unlikely to be issued to arms manufacturers and certain companies in the chip industry.
Even the technology used to mine and process rare earths, or to manufacture magnets from rare earths, can only be exported with government permission, according to the Commerce Ministry.
Chinese firms are also banned from working with foreign companies on rare earths without government approval.
The latest announcement clarifies the specific technologies and processes restricted, including mining, smelting and separation, magnetic material manufacturing, and recycling rare earths from other resources.
This could have a major impact in the US, which has a significant rare earths mining industry but lacks processing facilities.
The new regulations create Beijing's version of US rules that block countries from selling chip-making equipment to China.
Trade expert Alex Capri believes China’s new regulations are 'specifically timed' ahead of Xi and Trump’s expected meeting later this month.
Beijing has targeted key vulnerabilities in US electronics and weapons manufacturing, mirroring America’s earlier moves against China’s chip industry.
Rare earths are a group of 17 chemically similar elements crucial for high-tech products. While they are abundant in nature, they are considered 'rare' due to the challenges in extracting them in pure form.
China has a near monopoly on extracting and refining rare earths, with 61% of production and 92% of processing.
