China defends uncommon earth export restrictions as “authentic”

National flags of the USA and China decorate motorcades in Beijing, China.

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China on Sunday defended its new export controls on rare earths as a “legitimate” measure under international law and pushed back against U.S. accusations that they amounted to economic coercion after Washington announced sweeping retaliatory tariffs and export restrictions.

China’s Commerce Ministry said the controls issued Oct. 9 were part of Beijing’s efforts to strengthen its export control system and “better protect global peace and regional stability” amid a turbulent global security environment.

The measures, which now cover not only rare earth materials but also related intellectual property and technologies, were announced just weeks before a possible meeting between US President Donald Trump and Chinese leader Xi Jinping.

“These controls do not constitute a ban on exports. Applications that meet the requirements will be approved,” a Commerce Department spokesman said. “China has fully assessed the potential impact of these measures on the supply chain and is confident that the impact will be very limited.”

Beijing’s new restrictions also require foreign companies to obtain a license to export products that contain more than 0.1% of domestically mined rare earths or are made using China’s extraction, refining, magnet manufacturing or recycling technology. Applications for items that could be used for weapons or other military purposes will be rejected.

Shortly after Beijing tightened export controls on rare earths, the European Chamber of Commerce in China said there was a backlog of export license applications awaiting approval, adding that the new restrictions “add complexity to global rare earth supply chains.”

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In response to Beijing’s move, Trump announced on October 10 new tariffs of 100% on imports from China starting November 1, “above and beyond any tariffs currently paid.” Trump also said the US would also impose export controls on “all critical software” on the same day.

Stock markets plummeted after Trump said on Truth Social that “China should not be allowed to ‘hold the world captive’ with its rare earth policy” – wiping out $2 trillion in market value.

China’s Commerce Ministry accused the US of “double standards” on Sunday local time, pointing out that the US control list includes more than 3,000 items, compared to fewer than 1,000 on the Chinese list.

China accounts for around 70% of global supply and has repeatedly used the urgently needed minerals as a bargaining chip in trade talks.

Tensions whip

Just hours after tightening export controls on rare earths, Beijing also announced it would impose a fee on U.S. ships docking at Chinese ports starting Oct. 14. This reflects a new US fee on Chinese ships arriving at US ports, set to take effect on the same day.

According to the Center for Strategic and International Studies, the U.S. accounts for just 0.1% of global shipbuilding, compared to China’s 53.3%.

The Chinese Ministry of Commerce defended its counter-decision as “necessary passive defensive measures”. It added that the U.S. actions “have seriously undermined the atmosphere of economic and trade negotiations between the two sides.”

Top U.S. and Chinese officials met in Geneva for trade negotiations in May, the first time since Trump launched a global trade war. A follow-up meeting in London in June produced a trade framework, while a third round of high-level talks took place a month later, with both sides signaling progress in negotiations.

Recent trade meetings in Madrid in September resulted in a “basic framework consensus” on the divestment of Chinese company TikTok, ahead of a deadline for selling its US business or shutting down the social media app in the country.

On September 19, Trump and Xi had a phone conversation but failed to finalize a deal on TikTok. After the call, Trump announced that he and Xi had agreed to meet on the sidelines of the Asia-Pacific Economic Cooperation Forum in Gyeongju, South Korea, in the last week of October.

While China has remained silent on future meetings, Trump had also announced that he would visit China early next year and that Xi would come to the US at a later date.

However, Trump threatened to cancel his upcoming meeting with Xi in a social media post on Friday after China recently tightened export restrictions on rare earths.

— CNBC’s Anniek Bao and Evelyn Cheng contributed to this story.