China targets US rare earth and other firms with export controls

[BEIJING] China added MP Materials and USA Rare Earth, as well as eight other US entities, it said are linked to the US military to its export control list in retaliation for Washington placing several Chinese companies under restrictions this month.

Aveox, a motor manufacturer for mission-critical applications, was also among those placed on the list, which halts Chinese dual-use exports to the companies.

Pentagon-backed MP Materials, which operates the only active rare earth mine in the US, and USA Rare Earth are both involved in the mine-to-magnet supply chain.

The three US companies were not available for comment outside of business hours.

The measures are a response to the “US government’s malicious practice” and were taken to safeguard national security and interests, as well as to fulfil international obligations such as non-proliferation, China’s Commerce Ministry said in a statement on Monday (Jun 22).

“Organisations and individuals in any country or region are prohibited from transferring or supplying dual-use items originating in China to those entities,” it said, adding that export activities should be stopped immediately.

The move amounts to a full ban on dual-use exports to the named firms, tightening rules that previously only required export licences.

Analysts said, however, that China’s actions were a largely symbolic response to the Pentagon’s 1260H list of Chinese tech companies it believes to be aiding the Chinese military. The list was updated this month to include e-commerce giant Alibaba, Internet search provider Baidu, and automakers BYD and NIO.

“Most of the companies are US defence industry players or they have close connections with the US government... Those companies are not going to do business in China, so the impact will be quite symbolic,” said George Chen, partner for Greater China at the Asia Group, a geopolitical advisory firm.

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“Beijing’s move today is a proportional response to the Department of War’s 1260H list.”

In a separate notice, China’s finance ministry said that it has decided to take measures against 46 US companies. Chinese buyers are now barred from procuring any products manufactured by them, though US-funded enterprises operating in China can still do so.

The latest decision by Beijing also comes days after the Group of Seven countries reached an agreement to cap imports of rare earths from any single country outside the bloc and its partners to below 60 per cent by 2030 in an effort to reduce their reliance on China. REUTERS/BLOOMBERG