China Implements Stricter Controls on Rare Earth Exports and Key Commodity Imports
China has announced tighter controls on the export of rare earth metals and oxide products, as well as the import of key commodities such as crude oil, iron ore, copper ore concentrates, and potash fertilizer. The move comes as economic security remains a top priority for Chinese policymakers.
The Ministry of Commerce has instructed exporters of rare earth metals and oxide products to report their transactions. Additionally, importers of the aforementioned commodities have been asked to provide information on their orders and shipments. These new reporting requirements, which will last for two years starting from October 31, are an update to the commodity reporting regulations issued by the National Bureau of Statistics in 2022.
Previously, 14 imported items, including soybeans, rapeseed oil, formula milk powder, pork, beef, and sugar, were subject to the reporting mechanism. However, rare earths are now the only item on the export reporting list.
China, as the world’s leading producer of rare earths, has a significant strategic advantage due to their diverse applications in industries such as defense and new energy vehicles. Speculation that these rare earths could be used as a tool of retaliation against the ongoing US trade war has raised concerns.
Despite efforts by the US and its allies to secure alternative rare earth supplies, China has continued to be the primary source. To enhance oversight, traders will now be required to provide real-time reports on their transactions, including details such as the country of origin, contract signing date, quantity, shipment and arrival information, and the port of arrival for customs clearance. The data collected will be compiled and analyzed by the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters before being sent to the commerce ministry. While authorities have assured that they will protect commercial secrets and not share detailed business information, the new regulations highlight Beijing’s concerns regarding potential key choke points.
The import requirements also underline China’s heavy reliance on imported commodities to sustain its rapid economic expansion. As the world’s second largest economy, China heavily depends on crude oil, iron ore, and copper imports. The move to tighten controls reflects Beijing’s aim to address potential vulnerabilities in the supply chain.
China’s dominance in the rare earth market is confirmed by its significant share of global mine production and processing capacity. In 2022, China accounted for nearly 70% of the world’s rare earth mine production and nearly 85% of global processing capacity. These figures indicate that the reliance on China for rare earths is unlikely to ease in the short term.
The State Council meeting held last Friday reinforced China’s commitment to rare earth exploration, development, and research. Premier Li Qiang emphasized the need for proper planning, cracking down on illegal mining, advancing high-end rare earth materials, and promoting a green and smart transition in the industry. The announcement of export restrictions on graphite, gallium, and germanium products earlier this year further demonstrates China’s determination to protect these strategic resources and enhance domestic control amid growing US-led technology containment efforts.
While China’s recent actions aim to ensure the country’s economic security, they also send a signal to the global market. As the world becomes increasingly interconnected, the intricacies of international trade and supply chains take on greater importance. The implementation of stricter controls over rare earth exports and key commodity imports by China highlights the critical role these resources play in the global economy and the need for nations to safeguard their access to them.
