National flags of the US and China adorn columns in Beijing, China.
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China on Sunday defended its new export controls on rare earths as a “legitimate” measure under international law, pushing back against US accusations of economic coercion after Washington announced sweeping retaliatory tariffs and export restrictions.
China's Commerce Ministry said the controls, issued on October 9, were part of Beijing's efforts to strengthen its export control system and “better ensure world peace and regional stability” amid what it described as a turbulent global security environment.
The measures, which now cover not only rare earth elements but also related intellectual property and technologies, were announced just weeks before a possible meeting between US President Donald Trump and Chinese leader Xi Jinping.
“These checks do not constitute an export ban. Compliant applications will be approved,” a Commerce Department spokesperson said. “China has fully assessed the potential impact of these measures on the supply chain and is confident that the impact will be very limited.”
The ministry said it had notified “relevant countries and regions” through bilateral dialogue mechanisms before announcing the measures, adding that China remains open to further cooperation on export control practices to “ensure the security and stability of global industrial and supply chains.”
China's Oct. 9 announcement also required foreign entities to obtain a permit from Beijing to export products containing more than 0.1% of domestically produced rare earth elements, or manufactured using Chinese extraction, refining, magnet production or recycling technology.
Applications for items that could be used for weapons, terrorism or other military purposes will also be rejected.
This move prompted an immediate response from Washington. On October 10, Trump announced new 100% tariffs on imports from China “on top of any tariffs they are currently paying,” starting on November 1. Trump also said the US would also impose export controls on “all critical software” on the same date.
In response, China's Ministry of Commerce accused the US of “double standards.”
“The US has long generalized national security and abused export controls,” China's Commerce Ministry said, noting that the US control list includes more than 3,000 items, compared with fewer than 1,000 on the Chinese list.
China accounts for about 70% of global supply and has repeatedly used the critically needed minerals as a bargaining chip in trade negotiations.
The trade winds become choppy
Hours after tightening export controls on rare earths, China also announced it would begin charging American ships for docking at Chinese ports starting Oct. 14 — a direct response to Washington for imposing duties on Chinese ships arriving at U.S. ports, which would take effect the same day.
According to the Center for Strategic and International Studies, the US accounts for just 0.1% of global shipbuilding, compared to 53.3% for China.
China's Commerce Ministry also defended its mutual decision as “necessary passive defensive actions” on Sunday local time. It added that the US actions “seriously undermined the atmosphere of economic and trade negotiations between the two sides.”
Senior US and Chinese officials met in May for trade talks in Geneva – the first since Trump launched a global trade war. A follow-up meeting in London in June led to a 'trade framework', while a third round of high-level talks took place a month later, with both sides signaling progress in negotiations.
The latest trade meetings in Madrid in September delivered a “basic framework consensus” on the divestiture of China's TikTok, ahead of a deadline to either divest its US operations or shut down the social media app in the country.
On September 19, Trump and Xi spoke on the phone but did not finalize a deal on TikTok. After the call, Trump announced that he and Xi had agreed to meet in Gyeongju, South Korea, on the sidelines of the Asia-Pacific Economic Cooperation forum in the last week of October.
Although China has been silent on future meetings, Trump had also said he would visit China early next year and that Xi would come to the US at a later date.
However, Trump threatened to cancel his upcoming meeting with Xi in a social media post on Friday following China's latest tightening of rare earth export restrictions.
-CNBCs Annie Bao And Evelyn Cheng contributed to this story.
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