CHENNAI: China has announced new export restrictions on rare earth materials, intensifying its control over a sector critical to global technology, defence, and semiconductor manufacturing. The measures, unveiled by the Ministry of Commerce on Thursday, October 9, are aimed at tightening oversight on the export of rare earth elements, magnets, and related technologies, Reuters reported on Thursday.
Under the new rules, foreign companies dealing in sensitive sectors such as defence, aerospace, and semiconductors will face stricter licensing requirements or outright export bans. The policy also extends to recycled materials, processing equipment, and technology transfers, with companies now required to seek approval before entering overseas joint ventures involving rare earths. Chinese exporters must ensure that shipments are used only for civilian or approved industrial purposes, and not diverted to military applications.
According to the agency report, officials in Beijing said the decision is intended to safeguard national security and prevent the misuse of strategic resources. However, analysts view it as a calculated move in the ongoing global technology rivalry, particularly with the United States and its allies. China accounts for nearly 90% of the world’s refined rare earth output, giving it significant leverage over industries that depend on these materials for electric vehicles, wind turbines, advanced electronics, and precision weapons.
The restrictions are expected to hit defence and semiconductor manufacturers hardest, as these industries rely heavily on rare earth magnets and specialty alloys. Companies in Japan, South Korea, the US, and parts of Europe could face supply disruptions and higher costs. Global prices for rare earths are already showing signs of upward pressure as traders anticipate shortages.
Several countries, including the US, Australia, and India, are accelerating efforts to reduce dependence on Chinese supplies by developing local mining and refining capabilities. Australia’s Lynas Rare Earths has recently partnered with US firms to build alternative supply chains, while India is exploring ways to expand domestic production and secure stable imports.
Beijing has also asked importing nations, including India, to guarantee that Chinese-origin rare earths will not be re-exported or used for military purposes. Indian companies have reportedly offered end-user assurances to maintain trade continuity.
Market observers believe the impact of China’s latest move will unfold gradually, depending on how strictly the licensing regime is enforced. For now, the announcement has added fresh uncertainty to global supply chains at a time when industries are already struggling with cost pressures and geopolitical risks.
Overall, China’s tightening of rare earth exports underscores its intent to wield greater control over critical resources — a move that could reshape global manufacturing strategies and deepen the strategic divide between Beijing and the West.
