China Imposes Rare Earth Export Controls, Echoing US Strategies

China has recently implemented new export restrictions on rare earth materials, significantly impacting global technology supply chains. This strategic move requires foreign companies to gain approval from the Chinese government before they can export products containing even small amounts of Chinese-origin rare earth elements.

New Export Controls by China

These regulations mean that companies, including South Korean smartphone manufacturers, must seek permission from Beijing for devices sold to countries like Australia if they include Chinese-derived rare earth materials. This development indicates China’s increasing control over vital components in technology manufacturing.

Background and Strategic Intent

• China’s new rules reflect a pattern of retaliatory legislation similar to U.S. trade policies.
• Since 2018, under the Trump administration, the U.S. initiated a trade war, prompting Beijing to strengthen its policies.
• China’s Unreliable Entity List, created in 2020, resembles the U.S. Entity List that restricts foreign businesses from trading with the United States.

This change is seen as part of China’s broader strategy to leverage trade laws against what it sees as aggressive U.S. sanctions and international policies. Analysts note that Beijing is drawing from U.S. frameworks to formulate its own rules, suggesting a tactical copying of American trade practices.

Impact on Global Trade Relationships

In recent years, China has adopted various measures, including expanded export controls, to respond to perceived threats to its economy. These tools have been structured to mirror U.S. regulations, allowing China to engage in trade wars effectively.

A notable example includes the 2021 anti-foreign sanction law, empowering Chinese authorities to restrict visas and assets, akin to U.S. policies. Such actions demonstrate Beijing’s shift towards a more aggressive stance in its trade relations.

Risks and Implications

Despite China’s ability to impose such controls, experts warn that these retaliatory measures carry risks. An interpretation of reciprocity between nations might spiral into further escalations. In this competitive landscape, the potential for mutual harm remains high.

China’s recent actions serve as a reminder of the continuing tensions between the world’s two largest economies. As both countries refine their trade strategies, the landscape of international commerce is likely to become increasingly intricate.