PRC Announces New Export Controls on Rare Earth and Battery Materials and Technology

On October 9, 2025, China’s Ministry of Commerce (“MOFCOM”) announced in six proclamations broad new unilateral export controls on rare earth materials, equipment, and technology; lithium batteries; and superhard materials. For certain items, these measures extend People’s Republic of China (PRC) jurisdiction extraterritorially to items produced outside of China with controlled PRC technology or materials.

These new measures were couched by a MOFCOM spokesman as responsive to both diversion risks and the September 29 US export control expansions affecting affiliates and subsidiaries of listed parties. Although their regulatory terms are similar to those of the US de minimis-and foreign direct product rule (FDPR)-based export controls, China’s new controls corral a wide swath of commercial items without reference to their national security applications.

Select provisions took effect immediately, others are effective November 8, 2025, and the extraterritorial controls enter into force on December 1, 2025. In parallel, MOFCOM signaled a tightened end-use review posture for items connected to advanced computing semiconductors and AI with potential military applications.

Key Takeaways

• Immediate PRC-origin controls; extraterritorial reach by December 1, 2025. Controls on PRC-origin rare earth items were effective immediately; MOFCOM’s extraterritorial assertions over certain foreign-made items and items produced using specified PRC technologies become effective December 1, 2025.
• De minimis and foreign-direct-product–style jurisdiction. MOFCOM asserts jurisdiction over foreign-produced Annex Section II items that contain, are incorporated, or comingled  with Annex Section I PRC-origin rare earths at or above a 0.1% value threshold, and over Annex items manufactured abroad using specified PRC-origin rare earth technologies.
• Affiliate coverage under a PRC “50% rule.” Presumptive denials apply for military end‑users and entities on China’s Control and Watch Lists, expressly extending to subsidiaries, branches, and affiliates 50% or more owned by listed entities, complicating counterparty diligence and screening.
• Sectoral exposure. Electronics, semiconductor, semiconductor equipment, aerospace, automotive, defense, and defense‑adjacent manufacturers face new licensing touchpoints and potential shipping delays for cross‑border movements of covered parts and assemblies.
• Near‑term actions for companies. Map exposure to Annex inputs and technologies, implement procedures to generate and transmit MOFCOM‑compliant applications, strengthen beneficial ownership screening to capture the PRC “50% rule,” and prepare for license lead times in production and fulfillment schedules.
• Geopolitical and trade risk escalation. The measures have prompted threatened US tariff increases and potential additional US controls, signaling sustained policy focus on critical minerals and raising the likelihood of reciprocal or complementary actions.

New PRC Export Controls

Rare earth technologies and materials. New export controls cover five new medium and heavy rare earth materials, rare earth production and processing equipment, items related to specific rare earth raw materials, certain superhard materials and equipment, and technologies related to rare earth mining, as well as the assembly and maintenance of rare earth production lines. Rare earth mining technology controls are effective immediately, while the other controls are effective November 8, 2025.

Batteries. Effective November 8, 2025, new controls cover lithium battery equipment and technology; graphite anode equipment, materials, and technology; and cathode-related materials and equipment.

Extraterritorial Jurisdiction Over Rare Earth Materials and Technologies

Effective immediately, Announcement No. 61 and an accompanying Annex, which contains two sections listing specific rare earth items, establish MOFCOM license requirements for all PRC-origin items listed on Annex Section I and II.

In addition, effective on December 1, 2025, the following items require a license:

• Foreign-produced items listed in Annex Section II that incorporate, or are commingled with any PRC-origin rare earth items listed in Annex Section I at or above a 0.1% value threshold (Section II includes rare earth permanent magnet materials, certain sputtering targets, and parts, components, and assemblies containing them); and

• All Annex items produced outside China using PRC-origin technologies relating to rare earth mining, smelting and separation, metal smelting, magnetic material manufacturing, or recycling of rare earth secondary resources.

These provisions apply US-style de minimis and foreign direct product paradigms to rare earth products with a notably low value threshold, materially expanding compliance touchpoints for non-PRC manufacturers and distributors.

In furtherance of its new extraterritorial controls, MOFCOM also established specific licensing and compliance notice procedures. 

Licensing Policies & 50% Rule

MOFCOM reaffirmed several instances in which it maintains a presumption of denial licensing policy. Applications will be denied in principle for products that are or may be used for (1) designing, developing, producing, and using WMD and their delivery systems; (2) terrorist purposes; or (3) military use or enhancement of military potential.

For exports to military end-users and to entities on China’s Controlled List and Watch List, MOFCOM expressly extended coverage to subsidiaries, branches, and other affiliates in which listed entities hold 50% or more equity. The PRC “50% rule” mirrors recent US actions expanding controls to affiliates of listed entities. (See our Legal Update on the US Affiliates Rule.) MOFCOM’s spokesperson framed the step as necessary to address evasion and diversions that threaten China’s national security and non-proliferation interests.

Regarding advanced computing semiconductors and AI, Announcement No. 61 provides that export license applications will be reviewed on a case-by-case basis for end uses of: (1) research and development or production of 14nm and below logic chips, or 256-layer and above memory chips; (2) manufacturing of the production equipment, testing equipment or materials of the above-mentioned process semiconductors; or (3) research and development of artificial intelligence with potential military applications.

Finally, MOFCOM identified that, specifically for foreign parties, in situations in which an end use is humanitarian relief, including emergency medical treatment, response to public health emergencies, and natural disaster relief, export licenses are not required. Given the reference to foreign parties, while only the term export is used in the announcement, this likely refers to reexports and transfers. Any foreign party that uses this provision is subject to a reporting requirement by email to MOFCOM no later than 10 working days after the export committing that the relevant items will not be used for purposes that endanger China’s national security and interests.

Practical Implications for Global Supply Chains

MOFCOM’s extraterritorial assertion of jurisdiction at a 0.1% value threshold will pull a broad range of foreign-made magnet materials, sputtering targets, and assemblies into scope. To ensure compliance, companies outside China will need to enhance bill-of-materials traceability, origin attribution, and value allocation methodologies to determine whether finished items meet the de minimis threshold for each independently usable item. Downstream manufacturers incorporating MOFCOM-controlled inputs into assemblies must anticipate PRC licensing requirements for reexports to third countries.

Similarly, MOFCOM’s new “50% rule” affiliate coverage increases counterparty screening complexity. Parties should review beneficial ownership and control structures for customers, end-users, and intermediaries to identify majority-owned affiliates of PRC-listed entities, recognizing that approvals for such destinations are presumptively denied. Given the case-by-case posture for advanced semiconductor and AI-related end-uses, exporters should anticipate detailed end-use/end-user diligence examination by MOFCOM and extended licensing timelines.

US Response and Geopolitical Implications

Immediately following China’s announcements, US President Donald Trump announced on social media that he would impose an additional 100% duty on Chinese imports, effective November 1 or sooner, indicating the timing could shift depending on China’s actions. He linked the tariff threat, as well as potential cancellation of his anticipated meeting with PRC President Xi Jinping, to China’s new export control measures, and floated the prospect of new US controls on “critical software,” signaling economic pressure as the primary countermeasure while leaving open the possibility of a negotiated off-ramp. 

Separately, House Select Committee on the Chinese Communist Party Chairman John Moolenaar framed Beijing’s rare earth restrictions as a direct provocation toward the administration and a test of US resolve. He emphasized the national‑security stakes of China’s leverage over the semiconductor industry and pressed to accelerate diversification away from PRC‑controlled supply chains.

These intensifying export control actions are reminiscent of last spring, when China imposed limited rare earth controls, the United States issued restrictive customer screening guidance, and the United States temporarily imposed controls on commercial aircraft-related items and EDA software around the time of bilateral meetings in London. By addressing widespread commercial technology with extraterritorial controls, China has extended its reach more significantly than ever before.

In an October 11 social media post following President Trump’s remarks, MOFCOM noted:

“Particularly since the China-U.S. economic and trade talks in Madrid in September, the U.S., in just 20 days, has introduced a string of new restrictive measures targeting China. It has put multiple Chinese entities on the Entity List and Special Designated National List; arbitrarily expanded the scope of control over businesses with the Affiliates Rule that affects thousands of Chinese companies; and persisted with the implementation of Section 301 measures targeting China’s maritime, logistics and shipbuilding industries in disregard of China’s concerns and goodwill. The U.S. actions have severely harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China is resolutely opposed to them.”

Together, these responses point to sustained policy attention on critical minerals, with implications for licensing, procurement, and the supply chain across multiple sectors.

Conclusion

As the United States and China continue to wield export controls tools in economic negotiations, companies with multinational operations are again caught in the figurative crossfire. If China begins issuing licenses broadly and in a timely manner, supply chain disruption will be minimized. Compliance with new MOFCOM controls, however, will require additional resources to remain vigilant and ensure compliance with increasingly prevalent unilateral export control requirements.