China Imposes Export Controls on U.S. Minerals, Defense Firms

China has added ten U.S. companies to its export controls list, forbidding Chinese companies from selling dual-use products, or those that could be used for military and commercial purposes, to the targeted U.S. firms (The Wall Street Journal, subscription).

• The move follows the Pentagon’s imposition of restrictions earlier this month on Chinese firms with ties to the country’s military.

The minerals angle: Among the targeted firms are two producers of rare earths—MP Materials and USA Rare Earth—which are part of the U.S. strategy to diversify critical mineral supply chains away from China.

• Critical minerals have long been a sticking point in the tense trade relationship between the U.S. and China. In recent years, China had restricted exports of the raw materials, used in many indispensable products from electronics to defense systems, though it has since relaxed the controls.

Other controls: “In a parallel announcement Monday, China’s Finance Ministry excluded 46 U.S. companies, including Lockheed Martin, RTX and Boeing’s defense division, from China’s government procurement.”

Escalating tensions: Earlier this month, the Pentagon added several Chinese companies, including Alibaba Group and Baidu, to its list of firms entwined with Beijing’s military (though the companies deny the connection). Though firms on the list are only banned from working with the U.S. military, inclusion on it is seen as a stain on the company’s reputation that will alarm other potential customers. 

The NAM’s plan: China’s continuing weaponization of critical minerals reinforces the need to find other sources of these materials—a key policy priority for manufacturers in the U.S. 

• Earlier this year, the NAM released a comprehensive strategy for critical minerals policy—a framework that calls for strengthening domestic production and bolstering efforts with international partners to rebalance global supply chains.