China tightens export controls on rare earths: takeaways for global businesses
On 9 October 2025, China’s Ministry of Commerce (MOFCOM) announced a new round of export control measures targeting key products and technologies in which China holds a dominant supply chain position – rare earth, battery and superhard materials. These measures represent a major escalation of China’s export-control regime, extending restrictions from products to technologies and, for the first time, formally applying extraterritorial jurisdiction, creating substantial compliance challenges for manufacturers worldwide. The following article summarises the new measures and their implications.
1. Overview
MOFCOM issued six key notices (Notices No. 55–58, No.61-62 of 2025), each addressing specific product categories and technologies.
| No. of Notice | Key Focus | Key Controlled Items | Effective Date |
| Notice No. 55 | Superhard materials items | Including certain synthetic diamond items | 8 November 2025 |
| Notice No. 56 | Rare earth equipment and related raw and auxiliary materials | Production and processing equipment, and raw materials and related items | 8 November 2025 |
| Notice No. 57 | Medium and heavy rare earth items | Items related to holmium, erbium, thulium, europium, yttrium | 8 November 2025 |
| Notice No. 58 | Lithium batteries and artificial graphite anode materials items | Items related to lithium batteries, positive electrode material, graphite anode material | 8 November 2025 |
| Notice No. 61 | Overseas rare earth items |
| item i. and item ii. listed on the left column will go into effect on 1 December 2025; item iii. is effective 9 October 2025 |
| Notice No. 62 | Rare earth-related technologies | Including technologies relating to rare-earth mining, smelting and separation, etc. (Control Code: 1E902.a and 1E902.b) | 9 October 2025 |
2. Key features of the new policies
The greatest changes in the new measures are found in Notices No. 61 and 62.
a. Notice No. 61 of 2025
Notice No. 61 is a landmark in China’s export-control policy, asserting extraterritorial jurisdiction and harmonising with principles long applied in other jurisdictions.
i. Game changer: extraterritorial jurisdiction
Notice No. 61 mandates that overseas organisations and individuals must obtain an export licence from MOFCOM before exporting the specified overseas rare-earth materials and products listed in the above table to countries and regions outside China. Under this new rule, overseas entities may fall under China’s export control when exporting the specified rare-earth items from China to a third country, or from one foreign country to another. Specifically, overseas entities that manufacture products outside China and then transfer those products to another foreign country will be subject to China’s export control if their products contain Chinese-origin content. This direct application of Chinese export control to manufacturing and export activities conducted by overseas entities represents an exercise of extraterritorial jurisdiction. The Notice directly enforces the extraterritorial principle previously established in Article 49 of the Regulations of the People's Republic of China on the Export Control of Dual-use, which empowers MOFCOM to regulate the transfer of Chinese-origin dual-use items by overseas entities beyond China’s borders.
This extraterritorial reach of Notice No. 61 is achieved through the De Minimis Rule and the Foreign Direct Product Rule:
- De Minimis rule: Certain foreign-made products that incorporate more than 0.1% of controlled Chinese-origin rare earth raw materials by value are subject to China’s export control.
- Foreign direct product rule: Certain foreign-produced rare earth-related items using specified Chinese-origin rare earth technologies are subject to China’s export control.
ii. See through 50% rule
Notice No. 61 bars export licences for export to overseas military users and entities listed on China’s export control lists/watch lists, including their subsidiaries, branches, and affiliates under majority (≥50%) control. The introduction of the see through 50% rule for restricted entities marks a significant development in China’s export-control policy.
iii. Case-by-case review for sensitive end uses
Notice No. 61 bans export of specified rare earth items for military, terrorist, and other restricted end uses. Exports for end uses involving advanced computing semiconductors and AI with potential military applications will face case-by-case scrutiny.
b. Notice No. 62 of 2025
The key points of Notice No. 62 are as follows:
i. Technology as a controlled item
This notice targets the core knowledge underpinning the rare-earth industry. The controlled technologies require an export licence. Upstream technologies also fall under Notice No. 61's Foreign Direct Product Rule, extending control to products made abroad using them.
ii. Catch-all clause for non-controlled items
Notice No. 62 adds a catch‑all clause: exporters must obtain a licence for knowingly exporting non‑controlled items, technologies or services that are used in, or substantially contribute to, overseas rare-earth mining, smelting/separation, metal smelting, magnetic material manufacturing or rare‑earth recycling.
iii. Broad definition of “export”
Notice No. 62 defines “export” as:
- transferring controlled items from China to abroad; or
- providing such items to foreign organisations or individuals, whether inside or outside China, including via IP licensing, investment or other forms of transfer.
3. Implications for global business
a. High-end manufacturing will be most exposed
Rare-earth materials, battery materials and superhard materials on the controlled list are critical upstream materials in sectors like semiconductors, electric vehicles, aerospace, defence and consumer electronics. The expanded controls are expected to disrupt global supply chains and raise costs for high-tech manufacturers across the world.
b. Strict enforcement to be expected
Following the April 2025 rare-earth controls, MOFCOM has demonstrated rigorous scrutiny of licence applications. Reports indicate longer approval times and heightened scrutiny for exporters with several European manufacturers already experiencing delays. China’s customs service has also intensified enforcement, with a noted increase in case counts and penalty severity for illegal exports since the beginning of 2025. China will likely continue to tighten export-control enforcement under the new policy.
c. Compliance challenges under a complex extraterritorial regime
Notices No. 61 and No. 62 establish a complex and far-reaching control framework. Non-Chinese companies may now fall within China’s jurisdiction even when no Chinese party is involved, particularly if their products contain Chinese input or rely on Chinese-origin technology. This raises substantial due diligence, documentation and compliance burdens.
4. Strategic actions for global business
To navigate this new landscape, businesses should take immediate and strategic action:
- Conduct supply chain mapping: Conduct a thorough audit of your supply chain to identify exposure to the newly controlled items.
- Enhance customer due diligence: Examine equity structures and listing status on Chinese sanctions lists, prioritise end-use verification and require customers to sign compliance undertakings in accordance with Chinese law.
- Strengthen internal compliance: Develop robust internal compliance programmes aligned with the new export control regime.
- Engage legal experts: For critical supplies, proactively engage legal counsels specialising in Chinese export controls to understand the licensing process.
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