Beijing Tightens the Tap
On Oct. 9, China’s Ministry of Commerce (“MOFCOM”) issued new export-control notices tightening restrictions on the export of rare-earth materials, magnet technologies, superhard materials (synthetic diamonds), and high-energy battery components.
Together, these measures mark the most sweeping expansion of China’s export-licensing regime in years – and a direct signal that advanced materials are now instruments of state policy as much as trade.
What’s Covered
MOFCOM’s Notices No. 55–62 (2025), issued under the Export Control Law and the Regulation on the Export Control of Dual-Use Items (国务院令第 792 号), cover:
- Rare-earth metals and alloys (Notice 57) — dysprosium, terbium, holmium, erbium, thulium, ytterbium, samarium, gadolinium, lutetium, scandium, and yttrium.
- Magnet and powder materials (Notice 56) — used in electric vehicles, wind turbines, and electronics.
- Synthetic-diamond and superhard materials (Notice 55) — powders, single crystals, wire saws, grinding wheels, and DC-plasma CVD equipment.
- Battery-related technologies (Notice 58) — high-energy lithium-ion and artificial-graphite anode materials.
- Rare-earth processing and separation technologies (Notices 61 and 62) — covering extraction, smelting, metal production, and magnet manufacturing processes.
How the System Works
All controlled exports must now go through MOFCOM’s Bureau of Industry, Security, Import and Export Control (“BISIEC”), working jointly with China Customs under a “dual-linkage” enforcement system.
Exporters are required to:
- Apply for an export license through MOFCOM’s E-Platform;
- Submit paper copies to the relevant provincial commerce department;
- Await MOFCOM’s review—typically within 45 working days, conducted with input from other ministries; and
- Once approved, obtain the formal electronic export license before shipment.
Violations – false declarations, unlicensed shipments, or failure to report – can result in fines of 5 to 20 percent of the goods’ value, suspension of export privileges, and placement on a national “dishonesty list.”
Beyond Inputs: Technology, Equipment, and People
MOFCOM’s controls extend far beyond the export of physical materials. Non-Chinese companies involved in rare-earth mining, processing, refining, or magnet manufacturing may fall under Chinese export-control jurisdiction if they:
- Use Chinese-origin technology or know-how,
- Employ Chinese-made production or testing equipment, or
- Employ Chinese nationals engaged in any stage of those activities.
If these conditions are met, exports by such non-Chinese companies – or their downstream customers – may require a Chinese export license. Violations could not only expose the exporter to Chinese enforcement but may also affect its customers’ ability to sell goods into China in the future.
Under Article 7 of MOFCOM’s Announcement 61, Chinese citizens, legal persons, and unincorporated organizations are prohibited from providing substantial assistance or support for overseas rare-earth mining, separation, or magnet-manufacturing activities without prior government approval. Violations are subject to penalties under the Export Control Law and the Regulations on Export Control of Dual-Use Items.
These provisions raise new compliance and employment-law challenges for multinational firms with Chinese engineers, technicians, or R&D staff working abroad. Companies should assess both the contractual and personal-risk implications for Chinese nationals employed in technical or supervisory roles in overseas projects.
Exemptions and Transition
MOFCOM has indicated that licenses will be granted for legitimate commercial and humanitarian exports. A transition period allows companies to fulfill existing contracts before the new controls take effect
Humanitarian shipments—for medical, emergency, or disaster-relief purposes—are exempt.
What This Means for Industry
This new regime will affect automotive, electronics, renewable-energy, defense, and semiconductor manufacturers that rely on Chinese-origin materials or processes. Any product containing covered input – even at low concentration levels – may trigger licensing requirements.
The policy’s reach is extraterritorial: goods manufactured outside China using Chinese rare-earths or technology may also require MOFCOM authorization. Companies sourcing magnets, batteries, or alloys from Chinese suppliers should immediately evaluate whether their products fall within the control lists and plan for potential delays in export-license approvals.
Seeking an Exclusion or License
Chinese authorities have not announced a formal “exclusion” program akin to U.S. tariff exclusions, but the licensing process allows applicants to demonstrate non-sensitive end-use or commercial necessity. Exporters or their foreign customers must:
- Provide end-user and end-use declarations signed by both parties;
- Disclose all intermediate and ultimate destinations;
- Submit technical descriptions of the goods or technology; and
- Maintain compliance records for at least five years.
Provincial commerce departments forward complete applications to MOFCOM, which coordinates review with relevant ministries. Licenses are valid for one year (single-use) or up to three years (general licenses).
Applications that meet compliance requirements generally receive approval – but exports involving military, dual-use, or “sensitive-field” end-users are subject to heightened scrutiny.
What to Expect from the U.S. – Policy and Countermeasures
China’s MOFCOM Notices have put significant pressure on the U.S. government to diversify its supply chain for the critical materials key to defense, energy, transportation, and technology advancement. U.S. policy will reflect this pressure and will work toward a new reality where the U.S. can sustain its critical material demands outside of China’s monopoly. The U.S. strategy will most likely be two-fold:
- International Alliances – We anticipate that the U.S. will pursue partnerships with countries other than China for strategic and critical mineral mining and processing supply chains. Whether these alliances will look like the Quad Critical Minerals Initiative or legislative action will lead to the creation of the Critical Minerals Security Alliance proposed by Senator Cortez Masto (D-NV) and Senator Hagerty (R-TN), the U.S. is sure to explore new partnerships with trusted allies across the globe. Considering China’s monopoly over critical mineral mining and processing, the U.S. is not the only country to feel the impact of MOFCOM’s Notices – other nations will also be on the hunt for new partnerships.
- Vertically Integrated Domestic Supply Chains – While exploring international supply chain alternatives, the U.S. will likely bolster American mining and processing companies that are fully independent from China. By mandating licenses for foreign companies using Chinese-origin technology, equipment, or personnel, the MOFCOM Notices sharply limit the number of U.S. companies genuinely independent of China. To ensure that the small concentration of 100% American mining and processing companies remain competitive, we project that the U.S. government will employ new trade and funding focused policy.
- Trade – The U.S. government may increase tariffs on Chinese critical and strategic material imports. These tariffs would support domestic critical mineral companies and align with President Trump’s “America First” agenda and the “Unleashing American Energy” and “Immediate Measures to Increase American Mineral Production” Executive Orders from earlier this year. Along these lines, we may see some progress on Section 232 investigations on critical minerals, especially for rare earths and lithium. This retaliation would be a natural step in the tit-for-tat strategy the U.S. and China seem to be following. Yet, hope remains for the U.S. and China to hash out a trade deal following their meeting later this month. In the meantime, we will follow any China related trade announcements closely.
- Funding – Furthermore, given President Trump’s close working ties with private capital companies, we will be on the lookout for announcements of investment into the production of a domestic critical mineral supply chain. Opportunely, JP Morgan today announced their “Security and Resilience Initiative”, a $1.5 trillion investment plan into critical minerals, AI, and supply chain resiliency. We expect more funding opportunities for these projects, from both the U.S. government and private sector, to become available.
