China Tightens Export Controls on Rare Earths Ahead of Talks

China has announced new restrictions on the export of rare earth elements and related technologies, intensifying controls over these vital materials as tensions rise with the United States. The measures, revealed on October 5, 2023, by the Ministry of Commerce, come just weeks before a scheduled meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) forum in South Korea.

The newly implemented regulations require foreign companies to obtain special approval for the export of items containing even trace amounts of rare earth elements sourced from China. Additionally, export permits will be necessary for technologies associated with rare earth mining, smelting, recycling, and magnet-making. These steps underscore China’s dominant position in the rare earth market, where it accounts for nearly 70% of global mining and approximately 90% of processing.

Access to rare earths has become a critical point of contention in ongoing trade discussions between Washington and Beijing. As the U.S. has increased tariffs on a variety of Chinese imports, China has responded by tightening its grip on these strategically important minerals. This escalation raises concerns over potential shortages for manufacturers in the U.S. and other countries reliant on these materials for products ranging from consumer electronics to advanced military systems.

The Ministry of Commerce stated that the new restrictions aim to “better safeguard national security” and prevent the use of rare earth materials in sensitive fields, including military applications. The ministry highlighted that certain “overseas bodies and individuals” had previously transferred rare earth elements and technologies from China for military or other sensitive purposes, which it claims caused “significant damage” to national security.

According to George Chen, a partner at The Asia Group, “Rare earths will continue to be a key part of negotiations for Washington and Beijing.” He noted that while both parties seek more stability, significant negotiation tactics will precede any potential agreement between the leaders.

This announcement follows similar measures imposed by Chinese authorities in April, when they restricted the export of seven rare earth elements shortly after President Trump unveiled steep tariffs on various trading partners, including China. Despite the uncertainty surrounding supplies, China did approve some export permits in June and expressed intentions to expedite its approval processes.

As the international community watches closely, the implications of these new export controls will likely play a significant role in the dynamics of U.S.-China relations in the coming months. The situation remains fluid, with both sides maneuvering for leverage ahead of high-stakes discussions that could shape the future of global trade.