China's enhanced control over rare earths has caused a stir in foreign media, who have noticed that China's approach has changed, and it is now using the same tactics against the US.

On October 9th, our Ministry of Commerce released an announcement, which everyone has seen, two announcements both strengthened the export control of rare earths.

Some may ask, aren't we always controlling rare earths? Why are we strengthening them again this time? What exactly is being strengthened?

For example, the previous controls were one-on-one, not allowing sales to US military companies, strictly preventing domestic smuggling and third-party transshipment abroad.

Now China has included all rare earth-related items, even rare earth-related technologies, in the rules. The Financial Times said that this means any magnet produced using Chinese rare earth components or Chinese rare earth mining, smelting, or magnet production technology must obtain Chinese approval when exported by foreign companies.

In such a situation, some foreign media have drawn parallels, saying that this move is very familiar, it's the same tactic the US used to restrict China's semiconductor exports, meaning China is now "returning the favor" with the same method as the US.

Specifically, the US uses its export control system, especially the "Foreign Direct Product Rule," to limit the export of advanced semiconductor technologies and equipment to China.

Any foreign-produced goods that are "direct products" of US export-controlled technology or software must comply with US export regulations.

Even if the goods are produced outside the United States, if they involve US technology, the US can exercise jurisdiction.

This is similar to "long-arm jurisdiction," forcing global semiconductor supply chain companies to obtain US licenses when exporting to China.

Specific measures targeting China started in October 2022, when the US strengthened the "Foreign Direct Product Rule" to focus on restricting the export, re-export, or domestic transfer of advanced computing integrated circuits, supercomputers, and semiconductor manufacturing equipment to China.

For example, the lithography machines from ASML in the Netherlands, which are produced in the Netherlands, why can the US prevent them from being sold to China? The reason is that the US believes that even though the equipment is produced in the Netherlands, it uses US technology. The US Department of Commerce uses the "Entity List" to exercise long-arm jurisdiction and prevent ASML from exporting high-end lithography machines to Chinese enterprises.

The US' purpose is clear, through these rules to hinder China from producing advanced chips for artificial intelligence, supercomputing, and military applications.

Now, our rare earth exports are the same, controlling "direct products": foreign products containing more than 0.1% Chinese rare earths, or using Chinese technology, require Chinese approval, otherwise it would violate Chinese regulations.

What are the consequences? For example, US military companies will be denied permission; advanced semiconductor applications need case-by-case review. Foreign companies using Chinese rare earths in electric vehicles or chip manufacturers must trace their supply chains and provide detailed usage reports. Prohibiting Chinese enterprises from cooperating with overseas rare earth projects without permission.

Analysts believe that this is China's equivalent countermeasure against the US "rare earth card" before the possible summit between China and the US. If the US refuses to make concessions on technological restrictions, China's rare earth exports will become increasingly strict.

The effect of rare earth restrictions will directly affect the direction of future Sino-US negotiations, we will see.

Original article: https://www.toutiao.com/article/7559424962910601755/

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