China’s decision to extend export controls

China’s decision to extend export controls from rare earth materials to the core technologies behind them marks a pivotal shift in its economic statecraft. This move is less about immediate trade flows and more about securing long-term strategic leverage in a geopolitically competitive era.

From Commodity to Technology Leverage

For decades, China’s dominance in rare earths was based on its control of mining and processing. The new technology controls signify a maturation of this power. By restricting the export of know-how for mining, separation, metal making, and magnet manufacturing, China is protecting the crown jewels of its industry. It ensures that other nations cannot easily replicate the entire, complex production ecosystem, even if they develop their own mines. This consolidates China’s position not just as a supplier, but as the indispensable technological hub for the global rare earth industry.

The “Long Arm” of Jurisdiction

Perhaps the most strategically significant element is the establishment of extra-territorial controls through a companion decree (2025 Announcement No. 61). This rule states that any entity worldwide, when exporting an item that contains even 0.1% of a Chinese-origin controlled rare earth material or is produced using Chinese-origin controlled technology, must obtain a license from China’s Ministry of Commerce.

Implication: This gives China a degree of oversight and veto power over segments of the global rare earth supply chain that occur outside its borders. It is a clear move to prevent the circumvention of its controls and to embed its regulatory authority into international trade.

A Response to Strategic Competition

Official statements link the policy directly to national security threats, alleging that foreign entities have diverted Chinese-origin materials and technologies to military end-uses. This frames the controls as a defensive necessity. However, analysts also view it as a strategic counterweight in the broader technology war with the West, particularly the United States. Just as the West restricts advanced chip exports to China, China is now formally weaponizing its dominance in a critical resource sector where it holds an unmatched advantage.

Accelerating a Multi-Polar Supply Chain

Ironically, a primary long-term consequence of these controls may be to accelerate the very supply chain diversification that other nations seek. By highlighting the risks of over-reliance, China’s policies are providing a compelling business case for investments in rare earth projects in Australia, the United States, Southeast Asia, and elsewhere. The challenge for these projects is no longer just economic competitiveness against Chinese prices, but now also the technological gap that China’s new rules explicitly aim to preserve.

Ultimately, China’s rare earth technology export policy is a power projection tool. It signals Beijing’s intent to use every element of its industrial supremacy to secure its national interests and shape the rules of the game in a fracturing global order.