From cars and computer chips to tanks and fighter jets, China’s new export restrictions represent a sweeping effort to control global commerce and have set off a renewed trade fight that pits Beijing against not only the United States but also Europe.
The new regulations, which take effect in stages on Nov. 8 and Dec. 1, apply to the entire world, sharply escalating China’s sway over critical manufacturing at a time of increased international fractures over trade. The restrictions led President Trump on Friday to threaten to impose new 100 percent tariffs on Chinese imports starting Nov. 1.
The rules go far beyond China’s limits since April on the export of rare earth metals, which are mined and processed mainly in China, as well as magnets made from those metals. In a series of announcements on Thursday, China extended its restrictions to worldwide shipments of electric motors, computer chips and other devices that have become central to modern life and are now manufactured mainly in China.
The regulations prohibit exports from China to any country of materials or components for use in military equipment. Among the items banned are the small yet powerful electric motors in missiles and fighter jets and the materials for crucial range finders in tanks and artillery that are used to zero in on distant targets.
These rules have drawn particular concern in the West because of their potential to debilitate Europe’s efforts to supply arms to Ukraine and to rebuild Europe’s own militaries to counter Russian aggression.
“We’ve entered into a new phase of the economic conflict,” said Jay Truesdale, who worked in the administration of President Barack Obama on critical mineral policies. He is now the chief executive of TD International, a global strategic advisory firm.
Beijing’s decision to put a total ban on exports of materials for military use has geopolitical resonance in Europe. Countries there are racing to strengthen their military defenses from an increasingly aggressive Russia. Many armaments require rare earths and commodities from China. Chinese officials have vigorously opposed European Union tariffs on electric vehicles from China, and some experts saw the export controls as a fresh expression of Beijing’s pique.
The raft of regulations means that companies not involved in arms manufacturing must obtain export licenses from China’s Ministry of Commerce to move products with Chinese content across any national borders around the world. The rules broaden the use of elaborate procedures requiring exporters to submit technical drawings of every product their customers want to manufacture with Chinese rare earths and describe how these products will move through global supply chains.
After arms manufacturers, the global auto industry appears to be the second-most vulnerable sector, rare-earth industry specialists said. The thousands of companies that produce parts were already the hardest hit by China’s requirement in April that many kinds of rare earth magnets cannot leave the country without licenses.
A single gasoline-powered car can have more than 40 different rare earth magnets inside electric motors that power the brakes, seats, steering, power windows and other systems. Electric cars have even more rare earth magnets, which are used to turn the wheels.
American and European auto parts producers have encountered months of delays in obtaining these export licenses. China has started to issue licenses but the process has been slow and cumbersome, industry officials say.
China has modeled its rare earth regulations on American rules for trade in a few of the world’s most powerful computer chips. But rare earths are more widely used.
Many parts manufacturers have stopped assembling electric motors outside China with rare earth magnets from China, and now bypass Beijing’s rules by buying entire electric motors from China. But the latest regulations published by China’s Ministry of Commerce could prevent this workaround.
The rules encompass almost any product in which rare earths make up 0.1 percent or more of the value. That means they cover not just magnets but also electric motors and even much bigger systems that have electric motors with rare earth magnets inside.
The costliest components of car seats, for example, are the motors that adjust them. And the most expensive pieces in these motors are the rare earth magnets.
The new rules apply to any shipments across national borders, not just in or out of China. European automakers, in particular, face a daunting task of seeking Chinese export licenses to move car parts within Europe.
Many companies have recently tried to limit their dependence on China by buying rare earths and rare earth magnets from the few producers outside China. But Beijing’s latest regulations assert jurisdiction over much of this production as well.
The rules also say that any rare earth-related products made outside of China but using Chinese technology are also covered by China’s export control rules.
Rare earth refineries and magnet factories all over the world have been buying Chinese equipment for the past 20 years. Many equipment vendors in North America and Europe closed when most of the world’s rare earth mining shifted to China in the late 1990s.
Keith Bradsher is the Beijing bureau chief for The Times. He previously served as bureau chief in Shanghai, Hong Kong and Detroit and as a Washington correspondent. He lived and reported in mainland China through the pandemic.
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