China imposes landmark ban on mineral exports to US

Multinational companies are growing increasingly alarmed by China's recent decision to impose a trade embargo on the export of key minerals to the United States. 

Concerns are growing among multinational companies with operations in China following Beijing's decision last week to implement a trade embargo on the export of four essential minerals to the United States. A key point of anxiety is the provision that extends the ban to foreign companies that acquire these minerals from China and then transfer them to American firms, Caliber.Az reports per foreign media.

This move marks the first time China has included a broad ban on "transshipment" in an official export regulation, signaling Beijing's willingness to escalate its retaliatory measures in response to the tougher trade policies promised by President-elect Donald Trump. 

For years, China has criticized attempts by other nations, especially the United States, to impose similar restrictions on the transshipment of goods across their borders. The new ban could further fragment global supply chains, compelling companies to decide whether to supply products containing certain materials and components exclusively to the U.S. or China.

Additionally, China has been actively encouraging companies, particularly in Europe, to invest and establish supply chains within its borders, rather than relying on the U.S. market.

“The move marks a significant escalation of the ongoing tech war between the U.S. and China, and E.U. businesses are increasingly worried about being caught in the crossfire,” said Jens Eskelund, president of the European Union Chamber of Commerce in China. 

The mineral embargo is the latest step in China's broader effort over the past two decades to reduce reliance on imports by ramping up domestic production.

On December 3, the same day the Ministry of Commerce announced the mineral export ban, four government-linked trade associations instructed companies to avoid purchasing American-made computer chips. Two days later, the Ministry of Finance unveiled a draft proposal to overhaul government contracting, with a clear preference for companies that produce in China.

Joerg Wuttke, former president of the European Union Chamber of Commerce in China, noted that the closest China had previously come to banning indirect shipments was last May, but that was limited to just one company—a U.S. importer of custom-molded plastic parts from China.

In another sign of China’s tough stance on U.S. policy, it was announced on Monday that an antimonopoly investigation had been launched into Nvidia, the American company that dominates the global market for the advanced chips needed for artificial intelligence.

These actions may also signal China’s readiness to engage in negotiations with the U.S. over trade matters. 

China’s Commerce Ministry spokesman, He Jiandao, defended the new mineral export regulations as “a reasonable measure” and expressed China’s willingness to "strengthen dialogue with all parties in the field of export controls and jointly maintain the stability and smooth flow of global production and supply chains."

Meanwhile, the Biden administration has imposed a series of expanding restrictions on the export of “dual-use” products—those with both civilian and military applications—which have included transshipment bans.

By Naila Huseynova