The motorcade in Beijing, China, is decorated with US and Chinese flags.
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China on Sunday pushed back against accusations of economic repression by the United States and defended new export restrictions on rare earths as “legitimate” measures under international law, after Washington announced wide-ranging retaliatory tariffs and export restrictions.
China’s Ministry of Commerce said the regulation, issued on October 9, is part of the Chinese government’s efforts to strengthen its export control system and “better safeguard global peace and regional stability” amid what is described as a turbulent global security environment.
The measure, which now targets rare earth materials as well as related intellectual property and technology, was announced weeks before US President Donald Trump was scheduled to meet with Chinese President Xi Jinping.
A Commerce Department spokesperson said, “These restrictions do not constitute an export ban. Applications that meet the requirements will be approved.” “China has fully assessed the potential impact of these measures on its supply chain and is confident that the impact will be very limited.”
The Chinese government’s new regulations also require foreign companies to obtain permits to export products that contain more than 0.1% domestically produced rare earths, or that are manufactured using Chinese extraction, refining, magnet manufacturing or recycling technologies. Applications for weapons or other items that may be used for military purposes will be rejected.
Shortly after the Chinese government tightened rare earth export controls, China’s European Chamber of Commerce announced that there was a backlog of export permit applications awaiting approval, adding that the new regulations would “further complicate the global supply chain for rare earth elements.”
In response to Beijing’s move, President Trump announced on October 10 that he would impose new 100% tariffs on imports from China starting November 1, “exceeding the tariffs we currently pay.” President Trump also said on the same day that the United States would also impose export controls on “all critical software.”
The stock market plummeted after President Trump said on Truth Social, “China cannot be allowed to “capture” the world with its rare earth policy,” blowing away $2 trillion in market capitalization.
China’s Ministry of Commerce on Sunday local time accused the United States of “double standards,” noting that the U.S. control list includes more than 3,000 items, while China’s list includes fewer than 1,000 items.
China accounts for about 70% of the world’s supplies and has repeatedly used the critically needed mineral as a bargaining chip in trade negotiations.
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Hours after tightening rare earth export controls, the Chinese government also announced that it would begin levying fees on U.S. ships entering Chinese ports starting October 14, reflecting new U.S. fees on Chinese vessels arriving at U.S. ports scheduled to take effect on the same day.
According to the Center for Strategic and International Studies, the United States accounts for only 0.1% of the world’s shipbuilding industry, while China accounts for 53.3%.
China’s Ministry of Commerce defended the mutual decision as a “necessary passive defense measure.” It added that the U.S. actions “severely undermined the atmosphere of economic and trade talks between the two countries.”
Senior U.S. and Chinese officials met in Geneva in May for trade talks, the first time since President Trump launched the global trade war. A follow-up meeting in London in June produced a trade “framework,” and a month later a third round of high-level talks was held, with both sides signaling progress in negotiations.
The most recent trade conference in Madrid in September resulted in an “agreement on the basic framework” for the sale of Chinese-owned TikTok, ahead of a deadline to either sell its U.S. operations or shut down the social media app domestically.
Mr. Trump and Mr. Xi spoke by phone on September 19, but no agreement on TikTok was reached. After the phone conversation, President Trump announced that they had agreed to meet with President Xi on the sidelines of the Asia-Pacific Economic Cooperation Forum to be held in Gyeongju, South Korea, in the last week of October.
China has been silent about future talks, but Trump also said he planned to visit China early next year and that Xi would visit the United States at a later date.
However, President Trump threatened in a social media post on Friday to cancel his scheduled meeting with President Xi Jinping in response to China’s recent tightening of rare earth export restrictions.
—CNBC’s Anniek Bao and Evelyn Cheng contributed to this article.
