China’s rare earth export controls have gone global. Can it enforce them?
As economies look to diversify rare earth supplies in wake of China’s broad export controls, analysts say measures will be hard to implement
As more countries begin formulating contingency plans for their stocks of rare earth elements, analysts said China’s tightening control over its near-monopoly status in the supply and refining capacity of the minerals – an action taken as part of Beijing’s broader trade conflict with the US – could face challenges in enforcement.
One of several amendments to Beijing’s rules governing trade of the valuable minerals stood out: products made outside China that use the country’s rare earth technologies will fall under the export control umbrella starting December 1, as will permanent magnets and other items containing rare earths sourced from China at or above a designated proportion.
However, China does not yet have a comparable compliance architecture underpinning its export control regime, making execution on a global scale challenging, said Morgan Stanley in a report on Thursday.
“The US leverages decades-old legal frameworks, an established global licensing regime, close allied cooperation, and rigorous liability enforcement to ensure visibility over US-origin technology throughout intricate supply chains,” the investment bank said.