China Tightens Rare Earth Export Controls

China has unveiled sweeping new restrictions on rare earth exports, expanding its control over critical minerals and tightening scrutiny of foreign semiconductor and defense users.

Expanded Controls

The Ministry of Commerce announced Thursday it would add five more rare earth elements—holmium, erbium, thulium, europium, and ytterbium—to its export control list effective November 8.  

The measures extend to dozens of refining technologies and mining equipment, creating a new licensing regimethat requires approval for foreign firms producing rare earth magnets or chips with trace amounts of Chinese-sourced materials.

China’s new export control regime now extends extraterritorially: foreign firms exporting products incorporating even trace amounts (≥ 0.1%) of Chinese-origin rare earths must seek Chinese licenses. Exports produced abroad using Chinese rare earth extraction, refining, magnet or recycling technologies are also captured. The initiative marks a clear attempt by Beijing to project control over the global rare earth supply chain.

The rules also explicitly target military and sensitive end uses: licence applications to known military users or for weapons-related purposes will in principle be denied. Semi-conductor and AI uses with strategic import are subject to case-by-case review, underscoring that China seeks discretion over critical tech flows.

The regime phases in on December 1 for most requirements, though restrictions on pure Chinese-origin rare earth exports apply immediately.

Extraterritorial Reach

The  measures mark an escalation in Beijing’s campaign to wield extraterritorial controls, mirroring Washington’s own foreign direct product rules that block Chinese access to advanced chips. “Overseas exporters of items that use even traces of certain rare earths sourced from China will now need a license,” the Commerce Ministry said.

The moves come weeks ahead of a planned summit between U.S. President Donald Trump and Chinese President Xi Jinping in Gyeongju, South Korea, where negotiators are attempting to resolve a trade truce. Analysts said the timing strengthens Beijing’s leverage. “China just put some new negotiation pawns on the table,” said Gracelin Baskaran of the Center for Strategic and International Studies, quoted by the Financial Times.

Foreign Direct Product Rule

According to FT, the restrictions for the first time establish a Chinese version of the U.S. foreign direct product rule, applying to foreign-made magnets and semiconductor materials that contain at least 0.1% Chinese-origin heavy rare earths. Beijing said the measures are designed to protect national security and prevent misuse in “military and other sensitive sectors.”

Christopher Padilla of the Brunswick Group observes that China’s new rare earth export controls “are structured to mimic U.S. extraterritorial controls on AI chips and semiconductor manufacturing equipment.”

He notes that “the assertion of jurisdiction over third-country exports, the requirement for a re-export license, the small percentage of Chinese content that triggers a re-export license requirement, and the presumption of denial for military uses are all quite similar to U.S. export controls.”

Padilla added that the move “suggests that China is again seeking leverage via rare earths, with the intent of getting the U.S. to relax its own controls on chip technology and manufacturing gear.”

He said that, after the United States “traded off export controls as part of the London agreement earlier this year,” Beijing may be “testing the Trump administration’s willingness to make another such trade” at the upcoming summit, adding that “China can mimic U.S. export controls in a way that is painful for Western companies.”

China dominates the Rare Earths sector, controlling about 70% of global rare earth mining, 90% of processing, and 93% of magnet manufacturing, FT analysis showed. The new rules follow earlier bans on exports of gallium, germanium, and antimony to the United States, and restrictions on graphite and battery-related materials.

The impact of enforcement remains uncertain, but the announcement rattled supply chains already strained by Washington–Beijing tensions. South Korea’s industry ministry said it is assessing the new restrictions, while Samsung Electronics and SK Hynix declined to comment, Reuters reported.