In recent developments that underscore the intensifying trade tensions between the United States and China, Beijing has expanded its export regulations concerning rare earth elements, a move that marks a significant escalation in its ability to control global technology supply chains. The Chinese government now requires foreign companies to obtain official approval before exporting products containing even minimal amounts of rare earth materials originating from China or manufactured using Chinese technology. This policy shift extends China’s influence far beyond its borders and affects a wide array of global industries reliant on these critical materials.
Rare earth elements are essential components in the manufacture of many high-tech products, including smartphones, electric vehicles, aerospace technology, and advanced military equipment. China has long been the dominant supplier of these materials, controlling a significant majority of the global production and refining capacity. By imposing stringent export controls, Beijing is effectively able to regulate how these materials are used internationally, even when they are embedded in products made by companies outside China.
This new rule means, for example, that a South Korean smartphone manufacturer must secure permission from Chinese authorities to export devices containing any China-origin rare earth components to markets such as Australia. According to Jamieson Greer, a U.S. trade representative, this policy gives China unprecedented control over the entire technology supply chain worldwide. The implications are profound, as it allows Beijing to influence and potentially restrict the flow of critical technologies across international borders.
Interestingly, China’s recent move mirrors a long-standing U.S. policy known as the “foreign direct product rule.” This American export control mechanism extends U.S. jurisdiction to products made outside its territory if they are based on U.S. technology or contain U.S. components. The U.S. has frequently used this rule to limit China’s access to sensitive technologies, even when those products are made by foreign companies in third countries. In essence, China is adopting a strategy already employed by the U.S., signaling a tit-for-tat dynamic in their ongoing trade confrontation.
Experts observe that China has been actively studying and adapting U.S. trade and export control policies to bolster its own leverage in disputes with Washington. Neil Thomas, a fellow specializing in Chinese politics at the Asia Society Policy Institute, noted that Beijing is “copying Washington’s playbook” after witnessing the effectiveness of American export controls in constraining China’s economic and technological ambitions. This form of strategic mimicry illustrates the deepening rivalry between the world’s two largest economies, each learning from the other’s tactics to gain the upper hand.
The roots of this approach trace back to 2018, when the Trump administration initiated a trade war with China, imposing tariffs and export restrictions aimed at curbing China’s technological rise and addressing trade imbalances. In response, Beijing recognized the need to develop its own arsenal of legal and regulatory tools to counteract U.S. measures. It began enacting laws and policies designed to wield similar power over foreign companies and governments.
One such measure is China’s “Unreliable Entity List,” created in 2020 by the Ministry of Commerce. This list functions similarly to the U.S. Commerce Department’s “entity list,” which prohibits certain foreign companies from engaging in business with U.S. firms due to national security or foreign policy concerns. By placing companies on its own list, China can restrict their activities within its borders, impacting their supply chains and investments.
In 2021, China enacted the Anti-Foreign Sanctions Law, granting its government agencies the authority to retaliate against foreign sanctions by denying visas, freezing assets, or imposing other penalties on targeted individuals and businesses. This law closely resembles the powers held by U.S. departments such as the State Department and the Treasury, which use sanctions as a tool of foreign policy.
Chinese state media framed these legal developments as a strategic “toolkit” to counter foreign sanctions, intervention, and so-called “long-arm jurisdiction”—a term describing a country’s attempt to enforce its laws beyond its borders. Citing ancient Chinese wisdom, official reports emphasized Beijing’s intention to “hit back with the enemy’s methods,” underscoring the direct inspiration drawn from U.S. policies.
In addition to these lists and sanctions laws, China has expanded its export control regime and tightened scrutiny of foreign investments, further mirroring U.S. national security-driven trade measures. Legal scholars like Jeremy Daum of Yale Law School’s Paul Tsai China Center highlight how Beijing’s adoption of these tools often parallels U.S. approaches, illustrating a broader convergence in how both countries conceptualize and enforce national security