China Strengthens Rare Earth Export Controls, Targeting Defense and Semiconductor Sectors

China has officially tightened its rare earth export controls, specifically targeting the defense and semiconductor sectors. This announcement came from the Ministry of Commerce on October 9, 2023. This move builds on previous restrictions set in April that had significant global implications.

China’s Rare Earth Export Controls Explained

The new regulations clarify and extend existing controls on processing technology. These restrictions are particularly aimed at foreign defense users and entities involved in semiconductor manufacturing.

Geostrategic Importance

This shift in policy serves as a strategic tool for China in upcoming trade negotiations with the United States. The tightened controls come ahead of a high-profile meeting between Presidents Donald Trump and Xi Jinping in South Korea.

Impact of Rare Earths

China is a dominant force in the rare earth market, producing over 90% of processed rare earth elements. These elements are essential for various applications including:

• Electric vehicles
• Aircraft engines
• Military radars

New Restrictions on Technology and Exports

Under the latest rules, the scope of restricted technologies has widened. Key changes include:

• Export licensing for equipment used to recycle rare earths.
• Limitations on certain magnet types linked to advanced semiconductor applications.
• Overseas defense contractors will no longer receive export licenses for rare earth materials.

Global Reaction and Supply Issues

Despite a rise in rare earth shipments in recent months, many users report difficulties in securing necessary export licenses. The Ministry has acknowledged these concerns, indicating that it plans to implement various licensing facilitation measures.

Furthermore, coordinated efforts among U.S. lawmakers to restrict the export of chipmaking technology to China highlight the tension surrounding rare earth supply chains. As such, Chinese manufacturers need to apply for licenses when partnering with foreign companies on rare earth projects.

These developments reveal China’s intention to leverage its dominance in rare earth elements to influence international trade discussions effectively.