TAIPEI (Taiwan News) — China’s newly announced export controls on rare earth materials and technologies are expected to impact global supply chains, including Taiwanese manufacturers that depend on semi-finished products made from rare earths imported through Japan, according to an expert.

Su Tsun-tzu (徐遵慈), director of the Taiwan ASEAN Studies Center at the Chung-Hua Institution for Economic Research, said the new rules appear modeled after the United States’ Foreign Direct Product Rule, which restricts the use of US technology in certain foreign-made products, per CNA.

On Oct. 9, China announced exports of certain rare earths and related processing technologies would require case-by-case government approval beginning Dec. 1. The regulations apply to materials used in the production of semiconductors, artificial intelligence, and other advanced technologies with potential military applications.

Under the new framework, export licenses from Chinese authorities are required if rare earth elements sourced or processed in China make up more than 0.1% of a product. The controls also extend to products that rely on Chinese mining, refining, or magnetization technologies, effectively broadening oversight beyond direct exports.

“China’s export controls on critical minerals are more stringent, more extensive, and more far-reaching than before,” Su said. Even more damaging is that rare earth export curbs not only apply to the US but will be applied globally.

The timing of the announcement, roughly one month before the US imposes new tariffs on Chinese imports under the Trump administration, suggests that China may be seeking to strengthen its leverage in ongoing trade negotiations, Su added. The issue is expected to feature prominently at next month’s Asia-Pacific Economic Cooperation summit in South Korea, where leaders from both sides could meet.

Su cautioned that while both Washington and Beijing may still adjust the scope of the measures, uncertainty over their implementation could lead to short-term market disruptions, including panic buying and price spikes.

Industry analysts note that rare earths, though used in small quantities, are indispensable to the production of high-performance technologies ranging from precision defense systems such as fighter jets, submarines, and night vision equipment to electric motors and wind turbines.

According to data from the US Geological Survey, China is projected to produce 270,000 tonnes of rare earths in 2024, accounting for nearly 70% of global output. The US ranks second with 45,000 tonnes, or about 11%. China also holds approximately 44 million tonnes of rare earth reserves, 48.4% of the world’s total, followed by Brazil with 23.1 million tonnes.

Analysts say Taiwan’s manufacturers, while not directly importing large volumes of raw rare earths, could face indirect impacts through Japanese and Southeast Asian suppliers that rely on Chinese-sourced materials or processing technologies.