【Text by Observer Net, Qi Qian】

On October 9th, China introduced new regulations on the export of rare earths. While the United States reacted strongly, Europe also couldn't remain calm.

According to Bloomberg, on the 10th, a spokesperson for the German Ministry of Economics responded to the new Chinese regulations, saying that it was too early to assess the impact of the new regulations, but Germany is currently "conducting in-depth discussions at the national and EU levels" on this issue.

Rare earth-related items have dual-use characteristics, and implementing export controls on them is a common international practice.

However, the spokesperson later claimed that China's increasingly tightening restrictions on the export of key minerals in the technology industry are "a great concern," and stated that Germany must reduce its reliance on supplies outside the European Economic Area.

The spokesperson from the German Ministry of Economics said that the government is maintaining close contact with affected companies and communicating with the European Commission and other European partners.

The spokesperson continued to repeat the old rhetoric of "solidarity" and "localization," stating that the German government's "goal is to achieve a coordinated European response strategy," while gradually moving raw material mining and processing steps to Germany itself.

According to a report by The New York Times, the day before (on the 9th), EU Commission Spokesman Olof Gill said at a press conference that the EU expressed concern over China's latest export restrictions. He also said, "The EU Commission hopes China will show a reliable partner attitude, ensuring a stable and predictable supply of critical raw materials."

China holds a dominant position in the global rare earth magnet market. Financial Times illustration

Rare earth metals and magnets are essential materials for high-end products such as smartphones, electric vehicles, and fighter jets. China has long realized their importance and has established a leading position in global rare earth mining and processing over several decades.

Data shows that China controls about 70% of global rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.

According to the new regulations published by the Chinese Ministry of Commerce on October 9th, China will implement export controls on certain rare earth-related items manufactured abroad containing Chinese components and on rare earth-related technologies. The Financial Times reported that this means any magnet produced using Chinese rare earth components or Chinese rare earth mining, smelting, and magnet-making technology must be approved by China when exported.

The new regulations cover rare earth magnets and some semiconductor materials manufactured abroad containing 0.1% or more of Chinese heavy rare earth components, as well as items produced overseas using technologies related to Chinese rare earth mining, smelting and separation, metal smelting, magnet manufacturing, and recycling of secondary rare earth resources. These items will be subject to the new regulations starting December 1st; for some items originally from China, the new regulations will take effect immediately.

Additionally, China will "generally not approve" most export licenses for military use. Export applications involving the development of AI with potential military use will also be "reviewed on a case-by-case basis."

In April this year, after the Trump administration announced additional tariffs on China, China immediately included rare earth items in the scope of export controls. Since then, the U.S. and Western countries have felt "choked" and have been hyping up the so-called "rare earth shortage," while simultaneously investing heavily in developing "non-China" supply chains.

However, although the U.S. government has invested heavily in domestic mineral extraction, capital has sensed uncertainty and avoided it; the EU looked up at the moon, and in September released a report proposing mining in space, which was criticized as impractical.

Concept image of space mining, U.S. Space News website

After the announcement of China's new rare earth regulations, it immediately sparked heated discussions in foreign media. Foreign media generally believe that China's measures to implement export controls on rare earths have struck the U.S. automotive supply chain, forcing the Trump administration to sit at the negotiation table. After that, the rare earth issue repeatedly appeared in multiple rounds of Sino-U.S. trade negotiations, and the timing of the new regulations coincided with the time speculated for the official meeting between the two leaders.

The Financial Times pointed out that China's new restrictions are similar to the U.S. "Foreign Direct Product Rule" (FDPR) export control system, which is the rule used by the U.S. to prevent third countries from exporting semiconductor-related products to China.

Bloomberg in the U.S. evaluated that, just as the U.S. and China are about to sit down face-to-face for negotiations again, China has demonstrated its trade influence.

The Wall Street Journal analyzed that while the U.S. and Western countries are striving to build a rare earth industry chain to reduce dependence on China, China's latest move further expands its control over the rare earth supply chain. The newspaper also believes that the new Chinese measures on rare earths are considered an "almost unprecedented" export control, giving China greater leverage in trade negotiations.

"The timing of this choice is very strategic," said Gracelin Baskaran, a specialist on critical minerals at the U.S. think tank Center for Strategic and International Studies (CSIS). "China is just placing a new piece on the negotiating table."

"These rare earth minerals and their refining capabilities are the foundation of modern civilization," said Dean Ball, who recently stepped down from his position as an AI policy advisor at the White House and is now a senior researcher at the U.S. Innovation Foundation. He stated that given the importance of AI capital expenditures to the economy, if these regulations are strictly enforced, it could lead to a recession in the U.S. economy.

On October 9th, the spokesperson for the Ministry of Commerce of China answered questions regarding the strengthening of export controls on rare earth-related items, stating that rare earth-related items have dual-use characteristics, and implementing export controls on them is a common international practice. Therefore, the Chinese government legally implements controls on certain rare earth-related items manufactured abroad containing Chinese components, aiming to better safeguard national security and interests, and better fulfill international obligations such as non-proliferation.

As a responsible major country, China's implementation of controls on relevant items reflects its firm commitment to maintaining world peace and regional stability, and actively participating in international efforts to prevent proliferation. China is willing to strengthen communication and cooperation with all parties through multilateral and bilateral export control dialogue mechanisms, promote compliant trade, and ensure the safety and stability of the global supply chain.

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Original: https://www.toutiao.com/article/7559775448327143976/

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