Beijing defends rare earths controls as Washington threatens additional tariffs

Commerce ministry rejects US criticism, insists export restrictions aim to ensure compliance rather than ban trade

China has defended new export controls on rare earth elements and related technologies as legitimate measures to strengthen global supply chain security, rejecting criticism that the restrictions constitute a trade ban amid escalating tensions with Washington.

The Ministry of Commerce said on Sunday that export licences would be granted for eligible applications under the new regime, which took effect on Thursday. The measures cover rare earth processing technologies, superhard materials, specialised equipment and batteries—materials with significant military applications.

"China stands ready to work with international partners to strengthen dialogue and exchanges on export control to better safeguard the security and stability of global industrial and supply chains," a ministry spokesperson said, urging the US to manage differences through "dialogue based on mutual respect and equal-footed consultation."

Export data shows continued trade flows

Official customs data indicates China's rare earth exports totalled 44,355 metric tons in the first eight months of 2025, a 14.5 per cent increase year-on-year. The figures suggest Beijing's controls are focused on compliance rather than curtailing overall trade volumes.

China dominates global rare earth processing and supplies advanced graphite critical to high-technology manufacturing, from smartphones and wind turbines to military equipment. The 17 elements classified as rare earths are essential components in products ranging from consumer electronics to advanced weapons systems.

Ding Rijia, professor of economics at China University of Mining and Technology-Beijing, said China's position as the world's key processor creates "both the responsibility and the incentive to keep export flows compliant."

Tariff threat escalates trade tensions

The rare earths announcement came as trade tensions between Beijing and Washington intensified. The White House said on Friday it would impose an additional 100 per cent tariff on Chinese imports and introduce export controls on critical US-made software from November.

China's commerce ministry said the US actions "severely harmed China's interests and undermined the atmosphere for bilateral economic and trade dialogue," adding that "willful threats of high tariffs are not the right way to get along with China."

"China's position on the trade war is consistent: we do not want it, but we are not afraid of it," the ministry spokesperson said.

Business uncertainty clouds outlook

Chen Wenling, former chief economist at the China Center for International Economic Exchanges, characterised Washington's approach as lacking a "constructive" economic strategy beyond tariff threats and investment restrictions, reflecting what she described as a broader policy dilemma.

The volatility in US trade policy has created operational challenges for businesses. Lu Minglang, chairman of Ningbo Merryart Glow-Tech, a toy manufacturer in Zhejiang province, said American partners have repeatedly told him in recent months that "policies are unstable—we can't build inventory right now."

"We have been diverting resources from high-value research and development to coping with tariff fluctuations and logistics snags," Lu said, adding that a more stable bilateral trade relationship would benefit companies on both sides.

Jens Eskelund, president of the European Union Chamber of Commerce in China, said the chamber would work to maintain communication on the rare earths issue and continue facilitating exports to European companies.