On Thursday, October 9, 2025, China sent a shockwave through global markets and diplomatic circles by unveiling sweeping new export controls on critical rare-earth metals and related technologies. The move, announced by the Chinese Ministry of Commerce as "announcement number 61 of 2025," adds another layer of complexity to the already fraught relationship between the world’s two largest economies, just weeks before President Xi Jinping and U.S. President Donald Trump are scheduled to meet at the Asia-Pacific Economic Cooperation (APEC) summit in Seoul.
China’s new restrictions target five additional rare-earth metals—holmium, erbium, thulium, europium, and ytterbium—bringing the total number of controlled elements to 12 out of the 17 rare-earth metals, which include the 15 lanthanides, scandium, and yttrium. These metals are not household names, but their importance cannot be overstated. They are essential ingredients in everything from electric vehicles and lithium-ion batteries to LED televisions, advanced camera lenses, and, crucially, the U.S. defense industry’s most sophisticated hardware. As the Center for Strategic and International Studies (CSIS) points out, rare earths are used in the manufacturing of F-35 fighter jets, Virginia and Columbia-class submarines, Tomahawk missiles, radar systems, and even the Joint Direct Attack Munition series of smart bombs.
But China’s latest move goes beyond just the metals. The Ministry of Commerce also imposed new rules on the export of specialized technological equipment used to refine rare-earth metals. Most of these restrictions will take effect on December 1, 2025, giving negotiators on both sides roughly two and a half months to seek common ground. Foreign companies hoping to export rare-earth magnets or semiconductor materials containing as little as 0.1 percent heavy rare-earth metals from China will now need to secure special approvals. And to get those licenses, companies must explain precisely what they intend to do with the Chinese-sourced materials.
China’s official rationale? National security. A spokesperson for the Ministry of Commerce explained to reporters that "rare-earth-related items have dual-use properties for both civilian and military applications. Implementing export controls on them is an international practice." The spokesperson went on to allege that some foreign organizations and individuals have been transferring controlled rare-earth materials to "relevant organizations and individuals directly or indirectly for military and other sensitive applications." This, they argued, "has caused significant damage or posed potential threats to China’s national security and interests, adversely affected international peace and stability, and hindered global non-proliferation efforts."
Yet, as analysts have observed, the timing of this announcement is no coincidence. According to CNBC, China’s new rules represent the debut of a Chinese version of the "Foreign Direct Product Rule," a tool the U.S. has long used to control the flow of semiconductors to Chinese firms like Huawei. Now, Beijing is turning the tables, signaling that it is prepared to wield its own legal and regulatory arsenal to maximum effect. As Dewardric McNeal, Managing Director and Senior Policy Analyst at Longview Global, put it, "China is showing it is fully capable of adapting its legal toolkit to ensure that it is fit for purpose and willing to use law and regulation to maximum effect, both to secure short-term negotiating leverage and longer-term national interests."
China’s grip on the global rare-earth supply chain is formidable. According to CSIS, as of 2024, China mines at least 60 percent and processes about 90 percent of the world’s rare-earth metals. In 2023 alone, China exported $117 million worth of rare-earth metals and products, with the United States as its largest customer, importing $22.8 million. Between 2020 and 2023, the U.S. sourced 70 percent of its rare-earth compounds and metals imports from China, according to the U.S. Geological Survey. Other major importers include Hong Kong, Russia, and Japan.
The new restrictions are not just about minerals. They are part of a broader trend that experts call "lawfare"—the strategic use of laws, compliance regimes, and regulatory norms to assert power and shape global behavior. China’s regulatory framework has expanded rapidly, now encompassing more than 20 laws and statutes, from the Anti-Monopoly Law and Anti-Foreign Sanctions Law to the Unreliable Entities List (UEL). The UEL, once seen as a paper tiger, is now very real: in 2025, China added 14 more Western entities, including defense and semiconductor firms, to the list. Companies like TechInsights, a Canadian leader in semiconductor intelligence, have been barred from any cooperation or data sharing with Chinese entities. As CNBC reports, "This latest addition to the UEL list signals a new frontier in China’s lawfare strategy, targeting not only physical goods and technologies, but the information infrastructure and analytical capabilities that underpin supply chain transparency, compliance assessments, and competitive forecasting."
China’s Export Control Law has become a central tool of economic statecraft. Previously applied to gallium, germanium, and now rare earth magnets, it imposes strict licensing requirements on outbound shipments of these vital materials, deliberately slowing the global flow of inputs essential to advanced manufacturing, clean energy, and defense supply chains. These legal moves provide Beijing with both immediate negotiating leverage—especially with the Trump-Xi meeting on the horizon—and long-term structural advantages.
But the story doesn’t end with minerals and magnets. China is also pursuing dominance in global standards setting through initiatives like China Standards 2035 and by securing key positions in international bodies such as the International Telecommunication Union (ITU), the International Organization for Standardization (ISO), and the International Electrotechnical Commission (IEC). Chinese firms like Huawei and Hikvision are aggressive participants in these forums, aiming to define the technical norms that will govern the future of 5G, artificial intelligence, smart cities, and other advanced technologies. Meanwhile, U.S. firms and regulators are often less involved, raising concerns that American companies and consumers may soon find themselves operating under rules shaped in Beijing, not Washington.
For multinational businesses, these developments pose tough questions. As McNeal notes, "Too often, executives are unprepared for situations in which compliance with U.S. laws—once routine—now conflicts with obligations under China’s expanding legal and regulatory regime." The challenge is not theoretical. U.S. lawmakers have previously restricted China’s access to semiconductors, warning that Beijing could reverse-engineer or independently develop advanced technologies, securing a military advantage. In response, China has shown it is willing to retaliate not just with tariffs but with a dense web of regulations, sanctions, and export controls.
There are, however, a few exceptions to China’s new export rules. The Ministry of Commerce has clarified that exports related to emergency medical needs, public health emergencies, or disaster relief will be exempt from the restrictions—a small concession in an otherwise sweeping policy shift.
As the December 1 implementation date approaches, the world will be watching closely to see how the U.S. and its allies respond—and whether the upcoming Trump-Xi summit can yield any breakthroughs. For now, China’s latest move underscores just how much leverage it holds, not just in minerals but across the legal and regulatory landscape that shapes the future of global technology, security, and commerce.
