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Beijing enforces stricter rare earth controls to protect defense and chip sectors
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China tightens rare earth restrictions, focusing on defense and chip sectors

China Tightens Export Rules on Rare Earth Elements

China has expanded export controls on rare earth elements, affecting semiconductor and defense sectors. Foreign producers using Chinese materials must comply with new regulations, ahead of a key meeting between U.S. and Chinese leaders.

  • China restricts five new rare earth elements
  • New rules ahead of Trump-Xi meeting
  • Foreign producers to comply with regulations
  • Semiconductor users face increased scrutiny
  • Restrictions on advanced chips and defense
  • New rules effective November 8 and December 1

China has expanded its rare earth elements (REEs) export restrictions, adding five new elements and imposing tighter controls on refining technologies and semiconductor users. These measures come just weeks before a planned meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea.

Expanded Rare Earth Restrictions

  • China now restricts exports of 12 rare earth elements, adding holmium, erbium, thulium, europium, and ytterbium to the list of controlled materials.[1][2][3]
  • Controls apply not only to rare earth metals but also to downstream materials, components, and related refining and processing technologies.[4][5]
  • New rules require foreign producers using Chinese rare earths or related technologies to obtain Chinese export licenses, even if no Chinese companies are involved in the transaction.[6][1]
  • These enhanced regulations take effect from November 8, 2025, with additional rules on foreign companies effective December 1, 2025.[2][4]

Focus on Defense and Semiconductor Sectors

  • Overseas defense firms will generally be denied licenses to acquire Chinese rare earth materials or related technologies.[5][6]
  • Semiconductor users face increased scrutiny, with export licenses granted on a case-by-case basis for advanced chips including those 14 nanometers or smaller and memory chips with 256 layers or more.[1][2]
  • Restrictions cover research and development in artificial intelligence with potential military applications.[1]
  • South Korea’s semiconductor industry, including Samsung Electronics and SK Hynix, is reviewing the impact and continues discussions with China.[1]

Strategic Context and Global Impact

  • China controls approximately 90% of the world’s processed rare earth elements, critical for electric vehicles, aircraft engines, defense systems, and high-tech manufacturing.[7][8]
  • The export controls strengthen China’s negotiating position ahead of the Trump-Xi summit, increasing leverage amid ongoing trade tensions.[7][6][1]
  • The policies reflect a tit-for-tat approach mirroring U.S. export restrictions on semiconductor equipment and technology to China.[6]
  • Global efforts from the U.S., European Union, and allies aim to develop alternative rare earth supply chains to reduce dependency on China.[4][6]
  • Shares of Chinese and U.S. rare earth companies surged following the announcement, signaling market sensitivity to these moves.[9][2]
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  1. - Added five rare earth elements to export restriction list.
  2. - Expanded controls to refining technologies and downstream materials.
  3. - Required licenses for foreign companies using Chinese rare earths.
  4. - Denied licenses to overseas defense users.
  5. - Applied case-by-case approvals for advanced semiconductor applications.
  6. - Included AI research with potential military use under control.
  7. - Extended restrictions beyond raw materials to intellectual properties.
  8. - Emphasized national security and trade negotiation leverage.
  9. - Reflected tit-for-tat dynamics with U.S. export restrictions.
  10. - Highlighted surge in rare earth company stock prices.
  11. - Connected policy timing with upcoming Trump-Xi summit.
  12. - Addressed global efforts to build alternative supply chains.

FAQ

Why is China imposing these new restrictions?

China aims to tighten control over technology supply chains.

How will these new rules affect foreign companies?

They must comply with licensing requirements for using Chinese materials.

What is the timeline for the new regulations?

New rules take effect on November 8 and December 1.