Last Thursday, China’s Ministry of Commerce (MOFCOM) announced a series of new export controls (translation), including a new regime governing the “export” of rare earth elements (REEs) any time they are used to make advanced semiconductors or any technology that is “used for, or that could possibly be used for… military use or for improving potential military capabilities.”
The controls apply to any manufactured good made anywhere in the world whose value is comprised of 0.1% or more Chinese-mined or processed REEs. Say, for example, that a German factory makes a military drone using an entirely European supply chain, except for the use of Chinese rare earths in the onboard motors and compute. If this rule were enforced by the Chinese government to its maximum extent, this almost entirely German drone would be export controlled by the Chinese government.
REEs are enabling components of many modern technologies, including vehicles, semiconductors, robotics of all kinds, drones, satellites, fighter jets, and much, much else. The controls apply to any seven REEs (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium). China controls the significant majority of the world’s mining capacity for these materials, and an even higher share of the refining and processing capacity.
