China weaponises rare earths, risks global tech stability

Taipei, October 12: Taiwan’s technology and manufacturing sectors face potential major disruptions following China’s latest move to tighten control over rare earth exports, warned Kristy Hsu, director of the Taiwan ASEAN Studies Centre at the Chung-Hua Institution for Economic Research, reports 24brussels.

Hsu indicated that China’s sweeping restrictions are not confined to the United States but are aimed at pressuring any nation reliant on Chinese rare earth elements or technology. She cautioned that Taiwan could be significantly impacted, as a considerable proportion of its imported semi-finished goods and electronic components from Japan depend on materials or refining processes originating in China.

China’s Ministry of Commerce has introduced new export licensing rules mandating that global companies obtain approval if their products contain more than 0.1 percent of Chinese-origin rare earth materials by value. These regulations specifically target industries linked to semiconductors, artificial intelligence, and defense systems, which will now face stringent case-by-case evaluations.

Hsu likened Beijing’s latest policy to the US “Foreign Direct Product Rule” (FDPR), which Washington employs to control the global application of American technology. She noted that China’s version appears more extensive in scope and global reach, representing a “strategic escalation” of economic coercion.

Experts warn that if China fully enforces these regulations, there could be a surge in rare earth prices and increased stockpiling by major economies attempting to avert shortages. Hsu further emphasized that the overall repercussions would likely be severe unless China moderates its stance, although the degree of enforcement remains uncertain.

According to the US Geological Survey, China produced approximately 270,000 tons of rare earths in 2024, which constituted nearly 70 percent of worldwide output. Additionally, Beijing maintains control over about 90 percent of the planet’s refining capacity, a dominance that affords it significant leverage within global supply chains and technological production.