China's Strategic Move: Curbing Rare Earth Exports and the Rising Tensions with the US
In a bold move, China has introduced new restrictions on rare earth exports, a critical resource in everything from smartphones to advanced fighter jets. This comes as analysts predict an attempt to strengthen Beijing's position in trade negotiations with the United States ahead of a crucial leaders' meeting. The timing is significant, as it occurs just a month before President Trump and Chinese President Xi Jinping are expected to meet in South Korea, their first face-to-face interaction in over a year.
The Chinese Ministry of Commerce's 'unreliable entities list' targets U.S. defense technology companies, which heavily rely on Chinese rare earths. This list also includes the Halifax International Security Forum, an annual summit held in Canada. The move is seen as a strategic response to the intensifying trade friction between the two nations, following Trump's tariffs on Chinese goods.
Dan Wang, China director at the Eurasia Group, highlights the significance of this action, stating, 'Rare-earth tech access will likely feature in negotiations over tariffs, semiconductors, and broader tech trade. By demonstrating China's ability to calibrate controls, Beijing is showcasing a new level of confidence and sophistication.'
The new rules expand the list of controlled rare earths requiring export licenses, restrict the types of recycling and processing equipment that can be exported, and clamp down on the use of Chinese rare earths in chip manufacturing and military applications. These measures are justified by China as a means to enhance national security, citing recent activities by foreign entities that have caused harm to China's interests.
This is not the first time China has tightened rare earth exports. In April, following Trump's tariffs, Beijing imposed similar restrictions, leading to supply shortages and negotiations. The outcome of these talks was a call between Trump and Xi, which resulted in some progress on rare earths. The two leaders have since spoken again, setting the stage for their upcoming meeting in South Korea.
In a separate development, the Ministry of Commerce added 14 foreign companies, many of them American aerospace defense firms, to its 'unreliable entities' list. This move is linked to these firms' cooperation with Taiwan, which Beijing considers part of China. The spokesperson emphasized the negative impact of these actions on China's sovereignty, security, and development interests.
