Expert Suggests China Could Differentiate the U.S. From Other Countries in Rare Earth Controls to Avoid Being Accused of “Strangling the Whole World”

Over the past couple of days, U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer have been all over the media, slamming China’s tightened export controls. Basically, both of them accused Beijing of trying to choke the world with rare earths and decoupling from the global economy.

At a joint press conference during the IMF meetings, when talking about the recent escalation with China, Bessent said that China is acting like it’s picking a fight with the whole world.

Make no mistake, this is China versus the world. They have put these unacceptable export controls on the entire world. China is a command and control economy and we and our allies will neither be commanded nor controlled. They are a state economy and we’re not going to let a group of bureaucrats in Beijing try to manage the global supply chains.

Moreover, this should be a clear sign to our allies that we must work together. There will be series of meetings this week during World Bank, IMF week. And we are all on.

And on the same day, Bessent sat with CNBC’s Sara Eisen, highlighting the above argument again:

And to be clear, this is China versus the world — not a U.S.-China problem. The good news is that this is IMF week. Many of my counterparts are here — we’ll be meeting with our European allies, Australia, Canada, India, and the Asian democracies. We’re going to have a broad, collective response to this, because bureaucrats in China cannot manage the supply chain or manufacturing processes for the rest of the world.

Greer also made a statement elaborating on this in detail.

With respect to the matter at hand, last Wednesday evening, China announced a sweeping expansion of its export controls on rare earth elements, rare earth processing equipment, and technologies related to batteries, vehicles, industrial diamonds, and superhard materials.

To be clear, this is not just about the United States. If implemented, these actions would affect the entire world. China’s announcement is nothing more than a global supply chain power grab. While China has taken several retaliatory trade actions against the United States, Europe, Canada, Australia, and others in recent years, this move is not proportional retaliation—it is an act of economic coercion directed at every country in the world.

At its core, China’s new measures include a rule stating that any product containing more than 0.1% of minerals mined or processed in China must obtain approval from the Chinese government before it can be traded. Since many key semiconductors contain such critical minerals—and semiconductors are found in almost everything—this rule effectively gives China leverage over the entire global economy and technology supply chain.

The impact would extend to artificial intelligence systems and high-tech products, as well as ordinary consumer goods such as cars, smartphones, and even household appliances. It would also apply to many items critical to national defense.

For example, if a smartphone is manufactured in South Korea and sold in Australia, the company would first need to obtain China’s approval, since the phone’s semiconductors may include materials sourced from China. Similarly, if a car is built in the United States and sold in Mexico, the manufacturer would need Chinese approval before making the sale because of the chips used in the vehicle.

Obviously, neither we nor our allies are going to accept such a system.

In my view, as a talking point or tactical strategy, what Bessent and Greer said makes sense. With China tightening its export restrictions on rare earths, the U.S. not only needs its allies’ cooperation to build a “de-Chinafied” rare earth supply chain, but also needs to create international momentum, rallying other countries to pressure Beijing into rolling back those controls.

And in fact, this strategy might be working.

According to Reuters, the G7 agreed to maintain a united front on China’s export controls and diversify suppliers during the IMF meetings. European Commission Executive Vice President and Trade Commissioner Valdis Dombrovskis said:

“It was clear that G7 partners share concerns about these new, extensive Chinese export controls — not only expanding the range of covered minerals but also extending across the value chain with quite extensive extraterritorial provisions.
We agreed, on the one hand, to coordinate our work and engage with our Chinese counterparts to seek some short-term solutions. But more broadly, it’s clear we need to continue the ongoing efforts to strengthen diversification and supply chain resilience.”

But is China really trying to choke the world? No one truly knows what Beijing’s intentions are. If you look purely at the text of MOFCOM’s regulations, you could interpret it that way — but it can be more complicated considering China’s approach in drafting its export control rules.

Even though China’s Export Control Law has borrowed a lot from the U.S. EAR in recent years (the most notable example being the new rare-earth FDPR), it still has its own logic and structure. One key difference from the U.S. system is that China’s rules, once issued, apply globally to all countries; the differentiation usually happens later, case by case in the licensing stage.

The U.S. EAR, by contrast, divides the world into Country Groups (A, B, D, and E) based on each country’s relationship with the U.S. and the level of proliferation risk. Export license requirements, exceptions, and control strictness are all determined according to these groups. U.S. allies fall under Group A, which enjoys the most relaxed export rules, while China is placed in Group D, just one step below a full embargo.

So when the U.S. imposes export restrictions “on China,” it explicitly targets Group D:5, making it clear that those rules are not directed at other countries. That way, others—say, in Europe or Southeast Asia—don’t feel threatened or think the policy is about them.

China’s Export Control Law and the Administrative Measures on Dual-Use Items Export Control, however, don’t have this kind of framework. As a result, whenever China issues new control lists, it can easily cause anxiety abroad, since other countries don’t know whether they’re being targeted or whether their export license applications will get approved in the future. This uncertainty especially worries countries that have tense diplomatic relations with China—like the EU, India, or Japan.

In fact, the Chinese government itself seems to have realized this issue. Yesterday, the MOFCOM spokesperson gave two targeted responses.

First, MOFCOM emphasized that China’s newly introduced “rare-earth FDPR” is a legitimate step to improve its own export control system in accordance with laws and regulations.

I think that’s a helpful clarification—but it could have been explained more clearly.

The fact is, on October 19, 2024, China promulgated the Regulations on Export Control of Dual-Use Items (《两用物项出口管制条例》), and Article 49 of that regulation explicitly introduced China’s version of the Chinese version of FDPR.

Article 49 states:

Where foreign organizations or individuals outside the People’s Republic of China transfer or provide to specific countries, regions, organizations, or individuals the following goods, technologies, or services, the competent department of commerce under the State Council may require relevant operators to act in accordance with the provisions of these Regulations:

(1) Dual-use items manufactured abroad that contain, integrate, or are mixed with specific dual-use items originating from China;

(2) Dual-use items manufactured abroad using specific technologies or other dual-use items originating from China;

(3) Specific dual-use items originating from China.

In other words, MOFCOM’s Announcement No. 61 of 2025 (issued on October 9) was simply the first practical application of Article 49 in the field of rare earths. From the time the legal basis was introduced to its actual implementation, a full year passed. Besides rare earths, Article 49 can also be applied to other items on China’s dual-use export control list, such as superhard materials, batteries, and more.

At the same time, MOFCOM stressed that it is not ignoring the concerns of other countries — claiming that before announcing these measures, it notified multiple governments, including those of the United States, the EU, and Japan, and is continuing friendly consultations to facilitate communication on export control practices.

In addition, MOFCOM emphasized that export control is not an embargo, and the restrictions are targeted only at military-related applications of rare earths. For civilian and compliant exports, approval will be granted.

Indeed, the language in Announcement No. 61 supports this claim: the controls on civilian-use rare earths are limited to sensitive applications such as semiconductors and AI, specifically covering logic chips at 14 nm and below, memory chips with 256 layers and above, and AI systems with potential military use. These exports are subject to a “case-by-case review” rather than a “presumptive denial” policy.

That said, the review standards are not transparent and remain largely at MOFCOM’s discretion, which is where the greatest uncertainty lies.

MOFCOM’s response：

Q: Some media reports quoted U.S. Trade Representative Jamieson Greer as saying at a press briefing on October 15 that China’s recent measures would have broad impact across multiple sectors globally, including semiconductors, artificial intelligence, smartphones, automobiles, household appliances, and defense. What is China’s comment on that claim?

A: China’s recent export control measures on rare earths are legitimate actions taken in accordance with laws and regulations to further improve its export control system. The objective is to prevent rare earths from being illicitly diverted to improper end-uses, such as weapons of mass destruction, thereby better safeguarding China’s national security and global common security. The foreign-made rare earth products now subject to control are strictly limited to rare earth magnets and related components and rare earth sputtering targets, among others, that are already listed on China’s export control list. Prior to announcing these measures, China had notified the United States, the European Union, Japan, and other countries and regions. We are continuing friendly communications with related countries and regions on facilitation as far as the export control measures are concerned.

The U.S. interpretation seriously distorts and deliberately exaggerates China’s measures, aiming to provoke unwarranted misunderstanding and panic. In fact, the United States has long employed extraterritorial jurisdiction dating back several decades. Since 2022, the U.S. has repeatedly imposed semiconductor-related export controls targeting China, abusing globally applicable extraterritorial mechanisms such as the “0% de minimis rule” and the “foreign direct product rule” to coerce other countries into jointly containing and suppressing China. The U.S. remarks reflect a classic case of judging others by one’s own standards and precisely reveal how the United States itself has kept overstretching the concept of “national security.” The security and stability of global supply chains require the joint efforts of all countries, including the United States.

Q: We have noted that MOFCOM has emphasized that China’s export controls on rare earths are not export bans—compliant export applications for civil use can be approved, and relevant enterprises have no need to worry. However, some European companies have expressed worries that they may have to halt production while waiting for approval of their rare earth export applications from MOFCOM. Will MOFCOM consider establishing a “green channel” to alleviate the pressure on these enterprises?

A: Rare earths and related items possess clear dual-use attributes for both civil and military purposes. China’s imposition of export controls on these items in accordance with the law is a legitimate measure aimed at improving its export control system, safeguarding national security and interests, and fulfilling non-proliferation and other international obligations. The recent export control measures on rare earths represent a normal act by the Chinese government to refine its export control system in accordance with laws and regulations, and are not targeted at any specific country or region. All compliant export applications for civil uses will be approved.

Regarding the “green channel” you mentioned, I would like to clarify that, during the implementation of these measures, China will continuously optimize the licensing process, shorten review timelines, and actively consider introducing facilitation measures such as general licenses or license exemption, so as to effectively promote compliant trade.

China’s policy community has also taken note of the U.S. government’s accusation that China’s rare-earth FDPR is an attempt to “strangle the world.”

A well-known Chinese international trade expert responded on WeChat Moments to a post by Rush Doshi, a highly respected American expert on China studies. He wrote:

China’s current export control system does not use fixed country groupings, whereas the U.S. system divides countries into A, B, D, and E groups. Some countries use such groupings internationally, while others don’t. Right now, China doesn’t divide countries by group; instead, it makes decisions based on destination and other factors, meaning U.S. companies could still receive exemptions or streamlined approvals.

But if China did introduce grouping—for instance, conducting a destination risk assessment under Article 8 of the Export Control Law—then, given the countermeasure nature of the new regulations (since maintaining national security and interests is one of the law’s stated purposes), the U.S. could end up in the strictest category.

Following Rush Doshi’s logic, if China fully adopted the U.S. model, it should introduce such groupings. In fact, under the U.S. AI Diffusion Framework issued in January 2025, all countries and regions are divided into three categories with highly differentiated treatment—China’s group faces near-total restrictions.
Ironically, China’s export controls are actually less discriminatory, yet that has become the very reason U.S. officials accuse China of “waging a trade war against the world.”

The next day, the same expert added another comment:

If avoiding discrimination and not adopting country groupings is being interpreted as “strangling the world,” then perhaps China should consider following the U.S.-style grouping system.

It could, under Article 8 of the Export Control Law, conduct country and regional risk assessments and apply differentiated licensing policies — including exemptions, general licenses, case-by-case reviews, presumptive denials, and full prohibitions.

That way, China’s measures would be exactly the same as those of the United States.

For everyone’s reference, the content of Article 8 of China’s Export Control Law is available below:

Article 8

The national export control authorities, together with relevant departments, shall formulate export control policies. Major policies shall be submitted to the State Council for approval, or to both the State Council and the Central Military Commission for approval.

The national export control authorities may evaluate the destination countries and regions of controlled items, determine their risk levels, and adopt corresponding control measures.