China has intensified its efforts in the semiconductor race by implementing new export controls on rare earth minerals and the associated mining and refining technology. The country’s Commerce Ministry announced that it has added five rare earth elements to its export control list, bringing the total number of restricted minerals to twelve. This action was taken to safeguard national security.
The ministry has introduced an export license requirement for foreign producers. Companies must now apply for a license if they plan to export products that contain even small amounts of Chinese-origin rare earth minerals or if they use Chinese technology to mine these minerals.
Defense organizations will not be granted export licenses under the new rules. Licenses for the use of rare earth minerals in semiconductor manufacturing will be issued on a case-by-case basis following an individual review. However, exports intended for humanitarian aid, including public health emergencies and disaster relief efforts, will be exempt from the license requirements.
As the world’s largest producer of rare earth minerals, China frequently uses its dominant position in negotiations with other countries, particularly the United States. The US has recently threatened to expand restrictions on the export of chipmaking equipment and chips to China. Rare earth minerals are essential components in numerous industries, including the production of solar panels, electric vehicle batteries, semiconductors, and aerospace technology.
China’s new restrictions reflect a similar approach to the US Foreign Direct Product rule, which was expanded by the Biden administration last year to limit the export of chipmaking equipment from other countries to China. This recent announcement follows a previous move in April, when Beijing added several rare earth minerals to its control list in response to tariffs imposed by the Trump administration, an action that previously triggered a significant global shortage.