China's Grip Tightens: Rare Earths as the New Trade Pawn

In a significant geopolitical move, China announced on Thursday the tightening of its export controls on rare earth elements, a critical component for global industries, including defense and semiconductors. Beijing has added five new elements to its restricted export list, aligning with its strategy to assert influence ahead of the upcoming summit with the United States scheduled later this month in South Korea.

The Ministry of Commerce has rolled out new regulations mandating foreign companies producing rare earth products with Chinese materials to seek export licenses. The rules mirror similar restrictions by the United States on its semiconductor technology exports. This new directive seeks to leverage China's dominant position in the rare earth market, as the country remains the world's largest producer, accounting for over 90% of the supply.

The revised regulations, set to take effect on November 8, follow a period of shortages caused by previous export limitations. The strategic timing of this policy aligns with the expiration of a 90-day trade truce between Washington and Beijing. Meanwhile, South Korea, home to key memory chipmakers, is examining these developments closely to mitigate potential impacts on its industry.

(With inputs from agencies.)