China has tightened export controls on rare earths and other materials essential to high-tech manufacturing as trade talks with the United States continue.
It processes about 90% of the world’s rare earths, which are used in everything from solar panels to smartphones. This is an important bargaining chip ahead of this month’s meeting between Chinese President Xi Jinping and US President Donald Trump.
China already restricted processing technology and unauthorized foreign collaboration, but Thursday’s announcement formalizes those rules.
Foreign companies now need approval from the Chinese government to export products containing even small amounts of rare earth elements and must explain their purpose.
The Department of Defense announced similar restrictions on exports of lithium batteries and some forms of graphite, which are essential components of the global technology supply chain and are produced primarily in China.
Beijing said the rules were meant to “protect national security.” One of the main targets of these controls appears to be foreign defense companies, including those in the United States, that rely on China’s rare earths.
As the trade war with the United States intensifies, China added several rare earth elements and related materials to its export control list in April, causing severe shortages around the world.
However, the new announcement makes it clear that licenses are unlikely to be issued to weapons manufacturers and certain companies in the chip industry.
Even technologies used to mine and process rare earths or make magnets from them can only be exported with government permission, the Commerce Department said.
Chinese companies are also prohibited from collaborating with foreign companies in the rare earth field without government permission.
The latest announcement also identified certain technologies and processes being restricted.
This includes mining, smelting and separation, manufacturing magnetic materials, and recycling rare earths from other resources.
Assembly, debugging, maintenance, repair and upgrading of production equipment are also prohibited from being exported without a permit, the release added.
This could have major implications for the United States, which has a significant rare earth mining industry but lacks processing facilities.
The new rules create Beijing’s version of U.S. regulations that block the country from selling chip-making equipment to China.
The United States used these measures to delay China’s development of powerful chips that could be used in military artificial intelligence (AI).
Trade expert Alex Capri believes China’s new restrictions are “particularly timed” ahead of Trump’s meeting with Xi Jinping later this month.
He added that China has targeted key vulnerabilities in American electronics and weapons manufacturing, echoing earlier U.S. moves against China’s chip industry.
Rare earths are a group of 17 chemically similar elements that are important in the manufacture of many advanced technology products.
Although most of them are abundant in nature, they are known as ‘rare’ because they are very rare to be found in pure form and are very dangerous to extract.
You may not be familiar with the names of rare earths such as neodymium, yttrium, and eurodium, but you may be very familiar with the products in which they are used.
For example, neodymium is used to make powerful magnets used in speakers, computer hard drives, electric car motors and jet engines, allowing them to be made smaller and more efficient.
China has a near monopoly on rare earth extraction and refining, the process of separating rare earths from other minerals.
The International Energy Agency (IEA) estimates that China accounts for about 61% of rare earth production and 92% of processing volume.
Additional reporting from BBC Monitoring’s Ian Tang
