The Chinese Ministry of Commerce issued several export control announcements in a row, sparking hot debate in foreign media, and Trump also responded quickly.
On October 9th, just after the National Day, China's Ministry of Commerce issued several new regulations in one breath without warning, two of which were about rare earths. Foreign media expressed strong concern about this, because the control measures on overseas rare earth-related items in Announcement No.61 already have obvious "long-arm jurisdiction" color, which has always been a distinctive feature of the indiscriminate sanctions and restrictions imposed by the United States. The British "Financial Times" bluntly stated that China's new restrictions are similar to the US "Foreign Direct Products Rules" (FDPR) export control system.
According to the new regulations, China will implement export controls on some overseas rare earth-related items and rare earth-related technologies containing Chinese ingredients. Not to mention that China is rich in rare earth production, even the mining, smelting, separation and magnetisation technology is the top in the world. No country in the world can completely bypass China's rare earth production and supply chain, which means that any magnet containing Chinese rare earth components or produced by Chinese rare earth mining, smelting and magnetisation technology must be approved by China when foreign enterprises export it.
The fifth round of Sino-US economic and trade talks is expected to be staged at the end of October. The US also revealed that the Sino-US summit will be held during the APEC summit. Foreign media generally believe that the timing of China's new regulations has a strong "strategic meaning", which is equivalent to putting down new pawns on the negotiating table, which greatly increases China's bargaining chips. The United States has also noticed the new trend of China, and Trump has already made a statement on this.
On the 9th, just hours after China issued the new rules, Trump told members of the Cabinet meeting, "I don't know what measures were introduced, you don't know, nobody knows.I just heard this news, but we will know it soon."He pointed out two generals, one is U.S. Finance Minister Bessent and one is Commerce Minister Lutnik, saying the two will "treat this matter", although he does not yet understand what measures are updated by China, but he still confidently said eight words: "I believe we can respond."
So can the United States really deal with it?
About 70% to 80% of the United States 'current rare earth imports come directly from China, and its dependence on some key heavy rare earths reaches almost 100%. In addition, China controls about 90% of the world's rare earth refining capacity. Even raw ore from the United States has to be shipped to China for processing. The inability to independently produce and process, coupled with its deep dependence on China's supply chain, determines that the United States 'dependence on China's rare earths is not only deep, but also all-round, which means that the United States' military and high-tech lifeblood are in China's hands.
In April this year, in order to counter Trump tariffs, the Chinese side included rare-earth goods into the scope of export controls, the Trump administration was forced to sit at the negotiating table, the US party realized the terrible of rare-earth, is trying to invest huge amounts into the domestic mining, rebuild the domestic supply chain, and look for international alternative sources, such as Pakistan, Ukraine and other attempts to break up. But experts generally believe that the U.S. efforts are difficult to shake China's dominance in the short term, and the U.S. wants to build a complete and competitive rare-earth industrial chain, may take 8 to 10 years, even if successful, its cost is much higher than China.
In other words, the United States will have no way to win China's rare earth brand for at least eight years. At present, China's measures have had an immediate impact. The prices of some defense parts have increased significantly. The U.S. Navy's next-generation stealth fighter project has just reached a critical juncture. U.S. Defense Secretary Hagerseth made up his mind on the 3rd to promote the signing of the fighter contract. China's series of measures is a blow to the Pentagon.
Up to now, the United States doesn't have many choices. The Sino-US trade war has almost exposed the foundation of the United States. The United States needs China to buy goods, but China will not accept closing the door to high-tech exports. Trump should think about it.