China tightens leash on global defence, chip industries with new move to curb rare earth exports

China tightened its rare earth export controls on Thursday, expanding restrictions on processing technology, barring unauthorised overseas cooperation and spelling out its intention to limit exports to overseas defence and semiconductor users.

The announcement from the Ministry of Commerce clarifies and expands sweeping controls announced in April that caused massive shortages around the world before a series of deals with Europe and the U.S. resumed shipments.

China produces over 90% of the world’s processed rare earths and rare earth magnets. The group of 17 elements are vital materials in products from electric vehicles to aircraft engines and military radars.

Restrictions on exporting the technology to make rare earth magnets will be expanded to more types of magnets. In addition China will now also limit some components and assemblies that contain restricted magnets.

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China is the world leader in rare earth technology and equipment used to recycle rare earths will now also require a licence to export, adding it to the long list of processing technology already restricted.

The announcement also clarified for the first time some of the targets of China’s restrictions. Overseas defence users will not be granted licences, the ministry said, while applications related to advanced semiconductors will only be approved on a case-by-case basis.

A day earlier U.S. lawmakers called for broader bans on the export of chipmaking equipment to China. Samsung Electronics declined to comment while chipmakers TSMC and SK Hynix did not immediately respond to questions.

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China’s rare earth shipments have been growing steadily over the past few months as Beijing granted more export licences, although some users still complain they are struggling to get them.

In a nod to concerns about access, the ministry of commerce said the scope of items in its latest round of restrictions was limited and “a variety of licensing facilitation measures will be adopted.”

The new rules also bar Chinese companies working with companies overseas on rare earths without permission from the ministry.

Manufacturers overseas using any Chinese components or machinery must also apply for licences to export controlled items, the ministry said.