18.10.2025 13:39
The Chinese government has tightened its control over the export of rare elements. Any disruption in exports will affect the plans of the U.S. and Europe to strengthen their defenses. According to the new rules, elements used in chip production will also face restrictions. These advanced technology chips are crucial for smartphones, data centers, and other cutting-edge electronic systems.
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The Chinese government tightened its control over the export of rare earth elements with a statement published on October 9. U.S. President Donald Trump responded to this move by announcing an additional 100% tariff on Chinese products.
The reciprocal moves were made during a period of escalating competition between China and the U.S. in technology and trade. The two country leaders are expected to meet at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in the coming days.
RARE ELEMENTS ARE VALUABLE IN EVERY FIELD
Experts warn that the new rules announced by China will have widespread effects. Rare elements are highly valuable in every field, from semiconductor production to electric vehicles and defense manufacturing. However, the devil is in the details. The new rules are open to interpretation and could be a potential bargaining chip in U.S.-China negotiations.
With the new regulation, China added five medium and heavy rare elements to its export control list: Holmium, erbium, thulium, europium, and ytterbium. These elements are critical for missile guidance systems, high-performance magnets, and advanced electronics.
DISRUPTION IN EXPORTS WILL SHOCK THE U.S. AND EUROPE
China holds 80% of the world's medium and heavy rare elements. Experts say that any disruption in the export of these elements has the potential to affect the U.S. and Europe's plans to strengthen their defenses.
STRICT RESTRICTIONS ON ELEMENTS USED IN CHIP PRODUCTION
According to the new rules, elements used in the production of logic chips of 14nm and below and memory chips with 256 layers or more will face strict restrictions. These advanced technology chips are crucial for high-performance smartphones, data centers, and other cutting-edge electronic systems.
Additionally, exports to foreign military users and projects with potential military applications will generally be denied. The new rules will apply not only to Chinese companies but also to foreign individuals and organizations.
"CAN CREATE DISRUPTION IN THE ENTIRE GLOBAL SUPPLY CHAIN"
Two significant changes in the rules are noteworthy: Xiaomeng Lu, head of the geotechnology division at Eurasia Group, states, "If the restrictions are fully implemented, they will have a significant impact on the semiconductor, electronics, industrial materials, and military equipment sectors. The world is largely dependent on China for the discovery, extraction, and production of rare elements. A major disruption could create chaos in the entire global supply chain."
COMPANIES LIKE APPLE MAY NEED SEPARATE EXPORT LICENSES FOR EACH PRODUCT
The responsibility for obtaining export licenses will fall on exporters, but Lu suggests that companies like Foxconn and Apple may need to obtain separate export licenses for each product containing rare elements sourced from China.
In April 2024, China had already slowed down the approval processes for export restrictions on rare elements. China's customs data shows that rare element exports decreased by 31% in September compared to the previous month, reaching the lowest level since February.
STRATEGIC RESTRICTIONS
China's new announcement goes even further. It imposes special licensing requirements for the export of technology in rare element mining, refining, metal smelting, magnetic materials, or recycling. Experts say this gives China a significant advantage in the global supply chain.
China has been developing its expertise in rare elements for years. It currently controls not only production but also the production tools, machinery, and knowledge base.
"THE WEST HAS SUFFERED A COLLECTIVE LOSS"
Dr. Gavin Harper, a critical materials researcher from the University of Birmingham, states, "As China becomes an increasingly attractive route in the rare element supply chain, the West has collectively suffered a significant loss of expertise and capability. This has given China a critical dominance."
Harper also emphasizes that creating competitive and diverse supply chains will be both costly and time-consuming; "I'm not saying the West can't develop these technologies on its own, but capabilities, knowledge, and expertise have been lost over time, so it will take longer."
DID CHINA USE RARE ELEMENTS AS A BARGAINING CHIP?
The timing of China's move seems to be connected to the actions of the U.S. On September 30, the U.S. extended customs controls to subsidiaries of companies on the embargo list and introduced the "50% rule." This rule means that companies that are 50% or more owned by Chinese companies on Washington's blacklist are also subject to the same customs rules.
China responded similarly by blocking exports to any importer or end-user company listed on the control list. The rule is said to aim to close the legal loophole that allowed companies on the embargo list to obtain American technology.
Experts believe that China perceives this as a new escalation in the crisis and decided to retaliate by using rare elements as a bargaining chip. Lu from Eurasia Group states, "They were surprised by the U.S. Department of Commerce's 50% rule and wanted to counter Washington's lack of goodwill in trade talks immediately after the recent round in Madrid."
Lu adds, "But perhaps the damaging effect has exceeded initial expectations."
HOW WILL THE XI-TRUMP SUMMIT BE AFFECTED?
China's move also came just before the upcoming APEC summit where Trump and Chinese leader Xi Jinping are set to meet. Experts indicate that Beijing may use this as a bargaining chip.
China's new rules are being implemented in phases: on October 9, November 8, and December 1. This creates maneuvering space for negotiations.
Professor Zhiqun Zhu from Bucknell University states, "If the summit goes as planned, both sides will likely want to strengthen their bargaining positions. Then each may make concessions to present the talks as a success."
The Chinese Ministry of Commerce also emphasizes that the rules are not a blanket ban.
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A spokesperson for the ministry said, "Approval will be granted for exports that comply with the rules for civilian use. Companies have no reason to be concerned." Zhu also believes that China's measures target not the global economy, but the United States and countries like the Netherlands that maintain a "technology retention" stance.
The Dutch government took control of the chip manufacturer Nexperia, previously owned by China's Wingtech Technology, on October 13. Zhu states that Beijing could respond to this with various restrictions. Ultimately, how "civilian" or "military" use is defined depends on China.
According to Zhu, this also provides Beijing with the flexibility to loosen or tighten restrictions based on geopolitical conditions. Zhu says, "If Washington eases restrictions on high-tech exports, Beijing could also relax its control over rare elements. This would be a step towards reducing mutual tensions."