- China tightens rare earth export rules, requires gov approval.
- Blocks exports to arms, chip firms; impacts US trade talks.
- China controls 61% production, 92% rare earth processing.
For the purposes of hi-tech products such as electric vehicle motors, aircraft engines, loudspeakers, and computer hard drives, China has ramped up export restrictions on rare earth elements, which are indispensable. Limitations on processing methods and a prohibition on any illegal partnership with foreign organizations were among the measures declared by the Ministry of Commerce to standardize the restrictions.
Exports to foreign arms manufacturers and specific semiconductor firms are likely to be restricted, escalating tensions in ongoing trade and tariff negotiations between Beijing and Washington. This comes ahead of a potential meeting between Presidents Xi Jinping and Donald Trump later this month.
The new rules expand on April’s restrictions, which limited rare earth exports and triggered global shortages. Technologies for mining, smelting, separating, and producing magnets from rare earths now require government approval for export. Maintenance, assembly, and upgrading of related production equipment are also restricted.
Also Read: China Delays Rare Earth Supply to India, Hits EV Sector
Chinese firms are prohibited from collaborating with foreign companies on rare earth projects without permission. This could impact the U.S., which has a growing rare earth mining industry but limited processing capabilities. Rare earths, a group of 17 chemically similar elements like neodymium, yttrium, and europium, are critical for high-tech manufacturing. Though abundant, they are hazardous to extract in pure form, earning the “rare” label.
Market share is held by China which is responsible for 61% of global production and 92% of processing, as per the International Energy Agency. Besides, the U.S. and other Western countries accuse China of providing technology that can be used both ways to Russia, thus, facilitating the Kremlin's war in Ukraine, which Beijing denies.
The stricter regulations detail the prohibited activities more clearly, among which are recycling of rare earths and production of magnetic materials. The steps tighten China’s hold on the global supply chain for these indispensable elements, thereby having a ripple effect on the sectors dependent on the likes of stable magnets for small, high-efficiency devices. The limitations issue is a signal of the strategic role of rare earths in international trade and technology.