China moves to extend control over tech industry's critical rare earths

New laws restrict goods that are manufactured outside of China

China is hitting back at US export restrictions with some of its own, tightening its control on so-called rare earth minerals and introducing laws that require companies to get licenses before they can ship goods containing rare earths, even those made outside of the country.

Beijing's Ministry of Commerce [MoC] announced on Thursday two related measures. One governs the export of rare earth-related technologies, and another extends export restrictions to cover any goods manufactured outside China that contain rare earths sourced within the country.

This mimics US regulations that forced Dutch firm ASML to apply for licenses to sell certain chipmaking tools and provide services to Chinese companies, for example, as some of its technology was developed with American help. It also shows that Beijing is prepared to match Washington tit for tat when it comes to the trade wars and export controls.

China's latest move follows retaliatory tariffs and restrictions on rare earth minerals introduced back in April, along with a call for Washington to halt President Trump's on-off tariff measures and resolve trade differences through consultation instead.

It also comes ahead of a likely meeting between Trump and China's leader Xi Jinping at the Asia-Pacific Economic Cooperation forum in Korea at the end of this month.

Announcement 61 issued by the MoC's Security and Control Bureau imposes on foreign firms the need to obtain licenses in order to sell any items that contain rare earth metals or oxides originating from China, where the value of those materials accounts for 0.1 percent or more of the item's value.

It also requires export licenses for dual-use items on a case-by-case basis, particularly where the end use is the production of advanced memory chips, or the development of artificial intelligence that may be used for potential military purposes.

The second, Announcement 62 from the MoC's Safety and Regulatory Bureau, essentially says that any technologies related to rare earth mining and production may not be exported without permission. This includes technology-related data, such as design drawings, process specifications and simulation data, meaning that Beijing wants to curtail even the transfer of knowledge regarding how to process rare earth elements.

Magnetic material manufacturing is also covered under the new regulations, an issue that has already prompted an outburst from the US leader, who threatened more tariffs if China refused to comply.

In a statement, a Ministry of Commerce spokesperson said that rare earth-related items have dual-use properties, and imposing export controls on them is a common international practice, to prevent them from being used for military purposes.

"Therefore, the Chinese government has implemented controls on certain overseas rare earth-related items containing Chinese content in accordance with the law, to better safeguard national security and interests and fulfil international obligations, including non-proliferation," the spokesperson said.

Rare earth elements include exotic metals such as yttrium and neodymium that have become vital ingredients in advanced semiconductors, motors for electric vehicles, and components for a range of other applications.

China is believed to have around half of the world's deposits of rare earth minerals, but accounted for 69.2 percent of the world's production in 2024, according to some sources.

The effect of these restrictions could be far-reaching. As The Register has previously reported, rare earths are used in much of the high-tech equipment deployed by the US military, with a single F-35 jet said to contain 900 pounds and a Virginia-class submarine more than four and a half tons.

"This represents a sweeping extraterritorial expansion of China's export control regime - one that could severely disrupt global supply chains dependent on Chinese rare earth inputs and know-how," stated Henry Gao, Professor of Law, Singapore Management University, in a post on social media site X.

Also posting on X, entrepreneur Arnaud Bertrand, who lived in China for eight years, said the move is "potentially huge", because of the provision that anyone using rare earths to develop advanced semiconductors (defined as 14nm-or-below) will require case-by-case approval.

"Which effectively gives China de-facto veto power over the entire advanced semi-conductor supply chain," he comments, adding that "China is effectively mirroring the US semiconductor export controls that were used against them, with its own comprehensive extraterritorial control regime, except with rare earths." ®