China's Export Control Law Enforced... Rare Earth Export Restrictions Likely

Law Restricting Exports of Chinese Strategic Materials and Advanced Technologies Takes Effect from 1st
China Considers Rare Earths as Countermeasure to US Sanctions

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's state-run Global Times reported that China's Export Control Law will come into effect on the 1st.

The Export Control Law of China is a law that manages the export of strategic materials and advanced technologies, which was passed by the Standing Committee of the National People's Congress of China last October.

rare earth elements

The Global Times emphasized that the Export Control Law, which takes effect on this day, provides the legal basis to restrict or prohibit the export of military and other goods to protect China's national interests and security, and is also a legal tool to respond to the United States' repeated sanctions against China.

It also reported that market supply volatility of rare earth elements and unmanned aerial vehicles could increase, suggesting the possibility that rare earth elements may be included as strategic materials.

Rare earth elements, called the "industrial vitamins," are important raw materials used in hard disk drives (HDD), electric vehicles (EV), and wind turbine motors. China holds about 60% of the global market share.

The Global Times cited an anonymous expert saying that orders for rare earth elements have surged, and China's supply is unable to meet the demand.

However, it forecasted that although supply shortages may affect exports, there will be no sharp price fluctuations because China complies with World Trade Organization (WTO) regulations.

Zhou Xijian, former vice chairman of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters, said in an interview with the Global Times, "Western countries such as the United States and Europe import Chinese rare earth elements to produce advanced products," and predicted, "It may become difficult to import Chinese rare earth elements under the new law."

He also mentioned that tungsten, tin, titanium, cobalt, and other materials widely used in defense and telecommunications sectors could be included in the new law.

He added that, depending on the situation, China may use rare earth elements as retaliation against the U.S. semiconductor chip sanctions on Chinese products.