China's Export Control Playbook: More Than Just Rare Earths

The Diplomat

4 days ago

Rare earths have recently been at the center of China-U.S. trade talks and media coverage. Given China's dominance in the global supply, these minerals are often seen as Beijing's trump card against Washington – a perception reinforced by the recent U.S. unbanning of some AI chip sales to China following Beijing's easing of rare earth controls.
However, rare earths constitute only a fraction of China's broader strategic design of export controls. A closer examination of China's evolving export control regime reveals a far more expansive and systematic approach, targeting a broad spectrum of other mineral resources and advanced technologies beyond the widely discussed rare earths.
Export controls have been a key economic tool in great power competition. China's rapid development and application of the regime have equipped Beijing with new sources of leverage in international negotiations and begun to impact the global economy. The key question is not whether China will implement such controls, but rather whether and how they can retain effectiveness in a shifting geopolitical landscape, including evolving global supply chains.
China's Growing Interests in Export Controls
China's export control regime, initially established in the early 1990s as part of its nuclear nonproliferation commitments, has gained a sharper strategic focus in recent years. A significant turning point occurred in 2020 with the enactment of the new Export Control Law, which provided a legal basis for regulating the exports of goods, technologies, and services deemed crucial to national security. Subsequent updates to the Catalogue of Technologies Prohibited or Restricted from Export (the Catalogue), including its further revision in late 2023, extended its reach into emerging high-tech domains.
This institutionalization deepened in 2024 with the promulgation of the Regulations on Export Control of Dual-use Items, which introduced a unified control system, provided implementation details, and strengthened oversight of high-tech sectors. The List of Dual-use Items Subject to Export Control was then released to integrate control lists derived from pre-existing regulations and rules systematically.
Over the past few years, Beijing has intensified its efforts to tighten export controls on a broader range of minerals and technologies beyond rare earths. This trend continued into 2025: amid escalating U.S. tariffs on Chinese goods, China imposed additional restrictions in February on five critical minerals – tungsten, tellurium, bismuth, molybdenum, and indium – followed by the export controls over seven key rare earths in April. In July 2025, Beijing introduced a new wave of measures, including the enactment of the Mineral Resources Law, a crackdown on the smuggling of strategic minerals, the inclusion of technologies crucial for electric vehicle batteries and nonferrous metal processing in the Catalogue, and export bans targeting eight Taiwan-based entities.
Recent legal and regulatory developments have established a comprehensive legal framework that integrates interconnected laws, administrative regulations, and departmental rules across different levels. All these suggest a clear departure from China's earlier, more opaque and informal practices of export controls. While this formalization helps overcome principal-agent problems, enhances enforcement, and sends a clearer diplomatic signal to foreign actors, it also reduces policy flexibility. Legal commitments may constrain the state's ability to adjust or reverse course without incurring significant reputational or political costs associated with backing down, particularly when these measures are portrayed as defiance against Western hegemony.
Strategic Use of Export Controls and Their Global Impacts
China's current export control regime now extends well beyond rare earths, encompassing a wide range of technologies and minerals vital to defense and high-tech industries. It serves not only as a counter-pressure tool against the United States but also influences tech giants' business operations, as well as global trade flows and supply chains in emerging sectors.
One early example was the TikTok deal. In 2020, China added personalized information push services and AI interactive interfaces – crucial to TikTok's recommendation algorithm – into the Catalogue. This move significantly complicated any foreign acquisition of the platform's underlying technologies. By requiring adherence to Chinese laws and government approval, Beijing effectively influenced the transaction of these technologies to a strategic competitor.
China, the world's leading drone manufacturer, which accounts for 80 percent of the global consumer drone market, implemented export control measures to restrict foreign access to drone-related components and technologies. A typical example is U.S. drone maker Skydio: Chinese sanctions on the company in late 2024 effectively disrupted its supply chain, making it challenging to find alternative suppliers in the short term. In 2024, following Western allegations of China's support for Russia's war efforts in Ukraine, Beijing announced new drone export controls. These restrictions reportedly affected the flows of key components for unmanned aerial vehicles to the United States and Europe.
China's export control regime has also expanded to encompass a broader range of mineral resources beyond rare earths, including gallium, germanium, graphite, and antimony. According to an IEA report, among the 20 critical minerals analyzed, China is the leading refiner for 19, with an average market share of about 70 percent. With its dominance in these markets, China's stringent export controls not only affect global prices and supply chains but also pose challenges to other countries' defense and high-tech sectors.
While the impact of China's recent inclusion of technologies crucial for electric vehicle batteries in the Catalogue remains to be seen, the above cases illustrate China's broadening scope and growing use of export controls, as well as their potential implications for the global economy.
The Paradox of Weaponizing Market Dominance
Given the time required for alternative sourcing and technological breakthroughs, China retains considerable short-term leverage, not only through rare earths but via an increasingly broad set of other minerals and technologies. However, in the long run, China may face a dilemma: how to leverage its market dominance without eroding the trust and interdependence that underpin it.
China's strategic use of export controls has sparked widespread global concerns. The United States, Europe, and other economies are now accelerating efforts to diversify supply sources and reduce their reliance on Chinese markets. For instance, at the June 2025 G-7 summit, leaders pledged to strengthen cooperation in securing the supply chains of critical minerals essential for high-tech and green industries, aiming to break China's grip. Chinese restrictions may also spur new competitive pressures from producers worldwide, especially those in Western countries. Recently, the U.S. has ramped up investment in building reliable domestic supply chains of materials such as rare earths and gallium, while deepening international collaboration with like-minded partners in Canada, Australia, Japan, and Europe.
Given all these geoeconomic push-backs, the longer-term effectiveness of China's strategy, therefore, hinges on the pace at which the U.S. and its allies can secure viable alternatives and cultivate a post-China supply chain. Successful diversification would gradually weaken China's ability to weaponize interdependence, thereby undermining the very leverage it aims to preserve.
When the U.S. imposed technology restrictions on China, many of its allies supported the move, making China the target of coordinated actions, especially in areas like high-end semiconductors. Now, as China attempts to leverage its dominance in areas where it has an advantage through export controls, Western countries are responding with collective efforts to reduce dependence on Chinese supply chains. This pattern suggests that China faces strategic disadvantages in using negative economic statecraft, given the broader geopolitical alignment against it.
Conclusion
China's export control regime has evolved from a loose policy mechanism into a precise and institutionalized instrument of economic statecraft. By tightening controls over technologies and mineral resources where it holds a competitive advantage, China can inflict economic pain on targets and gain a bargaining chip in international negotiations. However, in weaponizing interdependence, Beijing walks a fine line between asserting dominance and catalyzing the very diversification that could erode it. In the long run, it may confront a paradox: how can it preserve its leverage without accelerating the very decoupling it seeks to avoid?