The Chinese government imposed sweeping sanctions on major U.S. rare earth corporations and defense and drone companies. The move comes after the United States announced sanctions on 188 Chinese tech corporations and the Group of Seven (G7) agreed to restructure the rare earth supply chain, signaling China is countering Washington's tougher checks on Beijing.
China's Ministry of Commerce said on the 22nd on its website that "to safeguard national security and interests and fulfill international obligations such as nonproliferation, we decided to include 10 U.S. corporations on the export control management list in accordance with relevant laws and regulations, including the 'Export Control Law' and the 'Regulations on Export Control of Dual-Use Items,' a local government ordinance."
According to the announcement, Chinese exporters cannot export dual-use items to the 10 corporations, and organizations or individuals in other countries or regions may be sanctioned if they transfer Chinese-made dual-use items to these corporations. The corporations must immediately halt related export activities currently underway, and if exports are absolutely necessary due to special circumstances, they must apply to the Ministry of Commerce for a license.
The export control list includes rare earth corporations ▲ MP Materials ▲ USA Rare Earths, and drone and defense-related corporations ▲ Aviox ▲ Red Cat Holdings ▲ Teal Drones ▲ IMSAR ▲ Xaiya Robotics ▲ Ball Aerospace and Technology ▲ Oshkosh Defense ▲ L3Harris Ocean Services.
According to Bloomberg News, MP Materials is a rare earth mining and processing company in which the U.S. Department of Defense holds equity, and it is a corporation that the U.S. government is actively fostering to reduce reliance on China for rare earths. MP Materials and USA Rare Earths have expanded production capacity over the past year since China began controlling rare earth exports in April last year.
Meanwhile, the G7 recently agreed to limit to 60% or less by 2030 the share held by any single country in imports of rare earths and permanent magnets to reduce dependence on China. The U.S. Department of Defense also said on the 8th that it added 188 Chinese tech corporations, including Alibaba, Baidu, BYD, and Changxin Memory Technologies (CXMT), to the list of "Chinese military-supporting corporations" for sanctions.
On the same day, China's Ministry of Finance announced sanctions banning government procurement of products from 46 U.S. corporations. The ministry posted on its website that it notified each central budget agency and local finance authority of the policy and "decided to take measures against 46 U.S. corporations in government procurement activities after going through approval procedures in accordance with relevant laws and regulations."
The sanctions list includes ▲ Lockheed Martin ▲ Raytheon Missiles & Defense ▲ General Atomics Aeronautical Systems ▲ General Dynamics Land Systems ▲ Boeing Defense, Space & Security, among others.
The measures released by the Ministry of Commerce and the Ministry of Finance take effect immediately as of that day.