Beijing tightens rare earth export controls amid escalating trade tensions with Washington

China has defended its decision to impose stricter export controls on rare earth minerals and related technologies, framing the measures as necessary for global supply chain security rather than a trade restriction, as tensions with the US over technology and trade policy intensify.

Export licensing system introduced

The Chinese Ministry of Commerce on Thursday announced immediate export control measures covering rare earth processing technologies, superhard materials, and battery components. Officials clarified on Sunday that the controls would not constitute an outright ban, with licences to be granted for eligible applications.

A ministry spokesperson said Beijing remained "ready to work with international partners to step up export control dialogue and exchanges to better safeguard the security and stability of global industrial and supply chains". The ministry cited national security concerns and non-proliferation commitments as justification for the measures.

Trade flows remain robust despite controls

China's rare earth exports totalled 44,355 metric tons in the first eight months of 2025, representing a 14.5 per cent year-on-year increase, according to the General Administration of Customs. The figures suggest export volumes have not been materially affected by the new licensing requirements.

Jens Eskelund, president of the European Union Chamber of Commerce in China, said the chamber would maintain communication with Chinese authorities to facilitate continued rare earth exports to European companies.

Strategic significance of rare earths

Rare earths comprise 17 elements essential for manufacturing high-technology products ranging from smartphones and wind turbines to advanced military systems. China dominates global rare earth processing capacity and serves as the primary supplier of advanced graphite products.

Zhou Mi, senior researcher at the Chinese Academy of International Trade and Economic Cooperation, noted that "prior to China's implementation of the export control system, international trade in rare earth resources had long lacked effective management". He added that the measures could reduce compliance risks for entities in the military sector.

Escalating US-China trade conflict

The export control announcement followed the White House's decision on Friday to impose an additional 100 per cent tariff on Chinese imports and introduce export controls on critical US-made software from November. The US measures came shortly after trade talks between Chinese and American officials in Switzerland, the UK, Sweden and Spain.

China's commerce ministry criticised Washington for introducing "a string of new restrictive measures" within 20 days of bilateral trade discussions in Madrid in September, stating the actions "severely harmed China's interests and undermined the atmosphere of bilateral economic and trade talks".

Chen Wenling, former chief economist at the China Center for International Economic Exchanges, observed that Washington's reliance on tariff threats and investment restrictions reflected "limited options" and had "disruptive effects on [the] US itself and international trade norms at large".

Business uncertainty weighs on manufacturers

Lu Minglang, chairman of Ningbo Merryart Glow-tech, a toy manufacturer in Zhejiang province, said US partners had told him repeatedly in recent months: "Policies are unstable — we can't build inventory right now." He noted that resources were being diverted from research and development to managing "tariff swings and logistics snags".

Despite trade tensions, Lu's company reported exports to the US exceeding Rmb100m ($14m) between January and August, a 20.43 per cent year-on-year increase, according to Ningbo Customs data.