Chinese media reports indicate that China is tightening its rare earth export policies, leaving U.S. media in a state of shock. In response to recent EU and U.S. reactions to China's new regulations, Bloomberg reported on October 15 that China's comprehensive measures signify the first major action to regulate the global flow of crucial minerals it dominates.

Earlier, foreign media widely interpreted that rare earth issues had reappeared multiple times in U.S.-China trade negotiations, and the timing of the new regulations has raised speculation. The newly implemented export controls might grant China greater leverage in trade talks.

Oliver Melton, head of China operations at the U.S. business consulting firm Rhodium Group, believes that the likelihood of a comprehensive cancellation of these new regulations is low, regardless of the outcome of U.S.-China negotiations. Having previously served as a Treasury Department attaché in Beijing, Melton told Bloomberg that this is a strategic decision aimed at ensuring China's sustained influence over the U.S. and other countries, thus preventing future export controls against China.

He further explained that China's significant move indicates that "Chinese policymakers have keenly realized they have the capacity to deliver significant blows to major American companies like Apple and Tesla, potentially affecting the U.S. market to a considerable extent."

Analysts Arthur Kroeber and Laila Khawaja from Dragon Capital issued a report on Monday predicting that China’s recently introduced rare earth regulation measures are "precisely calculated," with the core objective being to push the U.S. to ease its chip export controls in response.

The Financial Times previously cited analysts stating that the current escalation in U.S.-China relations has been entirely caused by U.S. policies issued in September, which have not only heightened tensions but also reaffirmed the prior administration’s diminished credibility.

Amid ongoing trade tensions, China maintains a dominant position in seven rare earth metals, while the U.S. has zero refining capacity for these elements. Bloomberg noted that a key component of the measures announced by China on October 9 is the global licensing requirement set to take effect on December 1. According to the new regulations, companies worldwide intending to export rare earth magnets or semiconductor materials containing 0.1% or more of Chinese-controlled rare earth metals must obtain approval from China.

Bloomberg highlighted that China's strategy to convert its dominant position in the global rare earth supply chain into a tool for protecting its own interests mirrors the U.S. method of exerting influence abroad due to its advantages: the U.S. utilizes the dollar's influence and the financial system's core position to implement long-arm jurisdiction globally, while China, leveraging its absolute control in the rare earth processing and permanent magnet production sectors, is starting to exert similar influence.

Chris Kennedy, a senior geo-economic analyst at Bloomberg Economics and a former official at the National Security Council during both Biden and Trump administrations, stated, "Due to the global circulation of the dollar and the core position of the U.S. financial system, the U.S. possesses unmatched influence in financial markets. In contrast, China's global influence stems from its dominance in key industries that are critical to global manufacturing."

U.S. media also claimed that since 2020, China has systematically built a control framework emulating the U.S., covering entities blacklist mechanisms and extraterritorial jurisdiction over technologies originating from China. "This move marks a significant milestone in the years-long expansion of China’s export control system."

However, it is essential to emphasize that items related to rare earths have dual military and civilian applications. Implementing export controls on them is standard international practice. The Chinese government’s legal control over certain foreign rare earth items containing Chinese components contrasts sharply with the U.S. misuse of entity lists and other export control tools, which has led to the imposition of illegal unilateral sanctions.

Bloomberg also noted that a top Chinese state think tank recently commented on the new regulations, stating, “Upgrading rare earth export controls will establish a model for a ‘responsible rare earth supply chain’ globally. As a responsible major country, China is transitioning from being a ‘rare earth supplier’ to a ‘rare earth order governor.’”

In the long run, strengthening related export controls on rare earths will facilitate better maintenance of national security and interests, along with fulfilling international obligations such as non-proliferation, while ensuring the safety and stability of the global rare earth industrial and supply chains.

Nevertheless, Bloomberg’s interpretation has portrayed the new regulations as evidence of China's "ambition to control global rare earth flows," asserting that these so-called "excessive" measures might backfire, potentially accelerating other countries' development of alternative supply chains and diminishing China's dominance in the sector—similarly to how U.S. restrictions on advanced semiconductors might unintentionally stimulate innovation in China.

However, the so-called "blowback risk" essentially misreads China's strategic layout in the rare earth industry and deliberately confuses "compliance control" with "unilateral blockade."

Wu Xinbo, director of the Institute of International Studies at Fudan University, previously told the South China Morning Post that China's latest trade countermeasures could serve as a "positive step toward stabilizing U.S.-China relations," compelling the Trump administration to adopt a more pragmatic attitude.

Wu indicated that China holds cards in hand, ready to play, and has the capacity to inflict pain on the U.S., suggesting that these countermeasures "will be very helpful and positive for the future of U.S.-China trade negotiations and the overall stability of bilateral relations."

He also added, "Now we've seen through Trump; we understand his game well."

On October 13, Chinese Foreign Ministry spokesperson Lin Jian responded to the U.S. threat of imposing 100% tariffs, stating that the U.S. has recently introduced a series of restrictions and sanctions against China, severely damaging Chinese interests. China firmly opposes this, asserting that instead of self-reflection, the U.S. threatens with high tariffs, a strategy that is not the correct approach to engage with China.

China urges the U.S. to promptly correct its erroneous actions and, guided by the significant consensus from the discourse between the leaders of the two countries, resolve mutual concerns through dialogue based on equality, respect, and reciprocity, manage differences properly, and maintain stable, healthy, and sustainable development in U.S.-China relations. If the U.S. continues on its unilateral path, China will resolutely implement corresponding measures to safeguard its legitimate rights and interests.