Rare earths and technology: China restricts trade with ten US companies
Rare Earth, Mp Materials and Aveox have been affected. Companies from third countries have also been blocked
Beijing is deploying the powerful weapon it has acquired in recent years: the export control mechanism, which can be activated particularly in cases where there is a suspicion of dual civil/military use of products that could potentially harm national security interests.
The real war between the two blocs is therefore being waged through a series of reciprocal sanctions affecting supply chains for raw materials and technology; as a result, yesterday the Chinese Ministries of Commerce and Finance took action, the former imposing sanctions on ten US defence companies in response to the ban on certain Chinese firms from accessing US defence contracts, and the latter prohibiting Chinese government bodies from purchasing products from 46 US companies.
The first package includes Aveox, Red Cat Holdings, Teal Drones, Imsar, Jaia Robotics, Ball Aerospace & Technologies, Oshkosh Defence, L3Harris Maritime Services, MP Materials and USA Rare Earth – in other words, the cream of American military technology, ranging from manufacturers of military drones to companies involved in the extraction of rare earths, to which Chinese suppliers will no longer be able to sell dual-use items. Aveox, in particular, is a manufacturer of vehicles designed for mission-critical applications. MP Materials, backed by the Pentagon, operates the only active rare-earth mine in the United States and, together with USA Rare Earth, is involved in the so-called ‘mine-to-magnet’ supply chain.
The most serious knock-on effect is on companies or individuals in third countries; they, too, are prohibited from transferring dual-use items from China to US companies subject to an embargo. Exports must cease immediately. However, Chinese companies may still apply for export approval for goods deemed genuinely necessary. The move amounts to a total ban on dual-use exports to the named companies, tightening the rules which previously only required export licences.
Separately, the Chinese Ministry of Finance has announced that government bodies will not be permitted to purchase products from 46 US companies, including various subsidiaries of Lockheed Martin, Raytheon and General Dynamics, without, in this instance, providing specific reasons for the measure. The ban is intended both to safeguard China’s national security and to respond to what has been described as the ‘unjust expansion’ of the so-called ‘List of Chinese Military Companies’ by the US government.
