China's latest move to refine its rare-earth export control system marks a significant advance in the country's export governance framework,strengthening its ability to safeguard national security and fulfill international non-proliferation obligations.
On Thursday,China's Ministry of Commerce issued announcements that detailed the"de minimis rule"and"foreign direct product rule"for rare earth-related items and technologies,implementing the extraterritorial application of China's export control regulations and signaling a new development phase for China's dual-use items export control system.
The refined export controls address critical vulnerabilities that have emerged since China began enhancing its rare-earth management framework.The Regulation on Rare Earth Administration that took effect on October 1,2024,established the principle that"rare-earth resources belong to the state"and provided for protective mining of these strategic resources.
Subsequent controls on medium and heavy-rare earth elements implemented on April 4,2025,targeted specific samarium,gadolinium,terbium,dysprosium,lutetium,scandium,and yttrium-related items.Similarly,on Thursday,authorities announced controls on rare-earth production equipment and raw materials,set to take effect on November 8,2025.
Despite these measures,evasion patterns persisted.Some entities circumvented China's export controls through transshipment via third countries or minor reprocessing abroad.These practices undermined the effectiveness of China's critical minerals export controls,necessitating more comprehensive measures.
The newly detailed rules close these loopholes by establishing that overseas organizations and individuals must obtain Chinese export licenses before transferring certain rare-earth items to other countries and regions,regardless of where these items were manufactured.
China's export control system has a robust domestic legal foundation.The Export Control Law,which took effect in 2020,established a unified export control regime and explicitly provides for extraterritorial application.The Regulation on the Export Control of Dual-use Items,effective December 1,2024,further specifies the"de minimis rule"and"foreign direct product rule."
These legal instruments establish that China's export controls apply not only to Chinese citizens and organizations but also to overseas entities.The controls cover not only export activities from China but also services facilitating export violations and all activities that may lead to controlled technologies flowing abroad,regardless of where they occur.
At the international level,China's measures align with established norms.United Nations Security Council Resolution 1540 requires all UN member states establish domestic controls to prevent the proliferation of weapons of mass destruction and their means of delivery.Many UN member states have implemented similar extraterritorial export control systems for critical minerals.
Furthermore,WTO rules contain security exception clauses that allow members to take necessary actions to protect their essential security interests.This provision permits extraterritorial application of export controls for genuine security concerns.
Unlike some countries that have abused security exceptions,China's measures demonstrate restraint and proportionality.The extraterritorial application,based on the MOFCOM announcement,currently targets only rare earth-related items,with provisions allowing license approvals when national security is not compromised.
This targeted approach minimizes disruption to global supply chain while addressing genuine security concerns.The announcement also provides compliance guidance for affected entities,allowing them to adapt to the new regulatory environment.
This contradicts practices by some countries and regions,which have reverted to the Cold War mentality,engaged in geopolitical and value-based alliances,overstated national security,and abused the extraterritorial application of export controls in pursuit of competitive advantage and global hegemony.Their abuse of security exceptions has been repeatedly ruled illegal by the WTO dispute settlement body,yet they persist in this practice,seriously undermining the authority of WTO rules.
China's refinement of its rare-earth export controls represents a necessary evolution in its export governance framework.By addressing evasion tactics through established legal channels,China strengthens its ability to protect national security interests while maintaining its international commitments.
Out of the consideration that strategic minerals have vital importance for national security and amid intensifying global oversight over them,such lawful,rules-based export control systems contribute to more stable and secure global supply chain.
Domestic and international stakeholders should take note of these developments and establish robust internal compliance programs to navigate the changing export control landscape effectively.
