China tightens rare earths export controls, blocking more elements and tech in lead-up to Trump-Xi summit
China has significantly expanded rare earth export controls, adding five new elements and adding extra scrutiny for semiconductor users, as Beijing tightens its grip on the sector ahead of talks between leaders Donald Trump and Xi Jinping.
The world’s largest rare earth producer also added dozens of pieces of refining technology to its checklist and announced rules that foreign rare earth producers using Chinese materials will have to comply with.
The Commerce Department’s announcements follow calls from U.S. politicians on Tuesday for broader bans on exports of chipmaking equipment to China.
They are expanding controls that Beijing announced in April, causing worldwide shortages, before a series of deals with Europe and the United States eased supply shortages.
“The White House and relevant agencies are closely evaluating the impact of the new rules, announced without notice and imposed in an effort to maintain control over the world’s technology supply chains,” a White House official told Reuters on Thursday.
The new restrictions come ahead of a face-to-face meeting between Trump and Xi scheduled for late October in South Korea.
“This helps increase Beijing’s leverage ahead of the Trump-Xi summit expected to be held in (South) Korea later this month,” said Tim Zhang, founder of Singapore-based Edge Research.
China produces more than 90 percent of the world’s processed rare earth elements and rare earth magnets.
The 17 rare earth elements are vital materials in products ranging from electric vehicles to aircraft engines to military radars.
Exports of 12 of them are now restricted after the ministry added five of them – holmium, erbium, thulium, europium and ytterbium – along with relevant materials.
Foreign companies producing some listed rare earth elements and related magnets will also now need a Chinese export license if the final product contains or is produced with Chinese equipment or materials.
This is true even if the transaction does not involve any Chinese companies.
The regulations mimic rules the United States has implemented to restrict other countries’ exports of semiconductor-related products to China.
It was not immediately clear how Beijing plans to implement its new regime, especially as the United States, the European Union and others race to create alternatives to China’s rare earth supply chain.
“We are likely entering a period of structural bifurcation, with China localizing its own value chain and the US and its allies accelerating theirs,” said Neha Mukherjee, a rare earth analyst at Benchmark Mineral Intelligence.
Citing concerns over supply shortages, the ministry said the items in its latest restrictions were limited in scope and that “various licensing facilitation measures will be adopted.”
China’s latest restrictions on five additional elements and processing equipment will take effect on November 8, just before the 90-day trade ceasefire with Washington expires.
Rules on foreign companies producing products using Chinese rare earth equipment or materials will come into force on December 1.
The Ministry also said that licenses will not be issued to defense users abroad, and applications related to advanced semiconductors will be approved on a case-by-case basis.
The new rules will apply to chips of 14 nanometers or more, memory chips with 256 layers or more, and equipment used to produce these chips, as well as related research and development.
These advanced chips are used in products that require powerful computing performance, from smartphones to AI chipsets.
The rules will also apply to research and development of artificial intelligence with potential military applications.
South Korea, home to leading memory chip makers Samsung Electronics and SK Hynix, is assessing the details of the new restrictions and will continue talks with China to minimize their impact, the industry ministry told Reuters.
