Beijing Unveils Sweeping Export Controls Amid Rising Tensions With Washington

On October 9, Chinese authorities announced a major expansion in export controls over rare earth elements and related technologies, escalating friction with the United States and rattling global supply chains. Under the latest rules—formalized in Announcement No. 61 of 2025—Beijing will now require foreign firms to obtain export licenses for magnets, components, and technologies that incorporate or are derived from rare earth materials sourced or processed in China. The new curbs target strategic sectors including defense, semiconductors, and advanced electronics. The measures are scheduled to take effect in phases from November 8 through December 1.

China defended the move as a measure to protect its national security and prevent the transfer of dual-use technologies abroad, but Washington swiftly warned of countermeasures, accusing Beijing of weaponizing its dominance in the rare earth supply chain.

New Elements, New Leverage

Previously, China had already restricted exports of seven rare earth elements earlier in 2025. Under the new regime, five additional elements—namely holmium, erbium, thulium, europium, and ytterbium—are now brought under control. Beyond this, the rules extend to specialized processing and magnet-manufacturing equipment, as well as recycling technologies. Even overseas products that contain trace amounts of rare earths derived from China—or that use Chinese processing technologies—will now require licensing approvals. A striking feature is the adoption of a “foreign direct product rule” (FDPR)-style approach: foreign manufacturers using Chinese-origin inputs or Chinese processing technology may fall under Beijing’s licensing regime, irrespective of where final assembly takes place.

Targeting Defense and High-Tech Industries

The new export controls directly target sectors deemed critical to China’s strategic interests. From December 1, 2025, firms linked to foreign militaries—including U.S. defense suppliers—are likely to see automatic denials or severe restrictions on license applications. Semiconductors, particularly advanced nodes and memory technologies, are also subject to case-by-case review, giving Chinese authorities discretionary power to delay or reject sensitive exports. Rare earths are central to many defense systems—jet engines, radar, missile guidance, unmanned vehicles—and China’s dominant position in refining and magnet production gives it significant leverage. Analysts warn the shift marks Beijing’s sharpest use yet of supply-chain control as a geopolitical instrument.

Washington’s Response: Threats and Strategy

The U.S. government reacted quickly. Treasury Secretary Scott Bessent publicly denounced China’s restrictions as an attempt to “pull everybody else down,” framing Beijing’s strategy as destabilizing. President Donald Trump, in turn, threatened to impose 100% tariffs on Chinese imports starting November 1, and to expand U.S. export controls on critical software. Washington also signaled it would accelerate efforts to onshore rare earth processing, strengthen supply chain partnerships with allies, and impose stricter export licensing on dual-use U.S. technologies sent to China.

Supply Chain Turbulence and Industrial Fallout

The tighter Chinese restrictions have unsettled global high-tech manufacturing. Companies reliant on rare earth magnets or components are scrambling for certainty, and some are stockpiling inventory in anticipation of licensing bottlenecks. In the defense sector, firms supplying U.S. and allied militaries fear disruption to critical systems. The semiconductor industry—already under pressure from chip shortages—is warning that new licensing regimes could delay production cycles. Meanwhile, markets responded with volatility: shares of Chinese rare earth groups surged, while stocks of U.S. alternative miners and magnet manufacturers also ticked higher.

Strategic Risks and Long-Term Implications

While China’s move gives it immediate leverage, analysts caution it is not without danger. Over time, countries may accelerate investment in independent rare earth processing capacity, eroding China’s dominance. A bifurcated global supply architecture may emerge—one chain under Chinese influence, another under Western oversight. The risk is that strategic dependencies in key industrial inputs become fixed geopolitical fault lines. For now, Beijing frames its expansion of export controls as legally justified and consistent with practices elsewhere, arguing that the dual-use nature of rare earths demands stricter oversight. Yet Washington views the escalation as a deliberate show of economic coercion—and warns that a stronger U.S. response is inevitable.

The Road Ahead: Diplomacy, Retaliation, or New Equilibria?

The timing of China’s announcement, coming just weeks before a planned meeting between Presidents Trump and Xi at the APEC summit, suggests strategic maneuvering ahead of high-stakes negotiation. Diplomatic channels are expected to intensify. China claims it is open to bilateral and multilateral dialogues on export controls, while reserving the right to defend its interests vigorously. For the United States and its allies, the challenge is dual: respond effectively without triggering full-scale trade war, and simultaneously reduce reliance on a single supplier through investment, diversification, and supply chain resilience. In a world of intensifying strategic competition, rare earths are no longer just industrial inputs—they are chess pieces in a broader global contest for technological and military primacy.