Asia Communique
The Grand Act by Beijing: Rare Earth Export Controls and President Trump's Next Step
Hello Readers,
Today, we unpack the latest flashpoint in the U.S.–China trade confrontation. Beijing has moved first with new export controls on rare earths—now the question is how President Trump will choose to respond.
China’s rare‑earth curbs draw retaliation from Washington
Beijing’s Ministry of Commerce issued a long statement defending its new export controls on rare‑earth elements and processing technology. The ministry argued that the restrictions were introduced because of U.S. actions such as adding Chinese firms to a trade blacklist and levying port fees on China‑linked ships. It insisted that China does not seek a trade war but “is not afraid of one,” calling Trump’s threats a “typical example of double standards”. Rare earths are vital for products ranging from smartphones and electric cars to missile guidance systems, and China currently dominates both production and processing.
U.S. President Donald Trump responded by announcing 100 % tariffs on Chinese exports to the United States and additional export controls on critical software, effective 1 November. The announcement rekindled the trade conflict and threatens to derail a possible summit between Trump and Chinese President Xi Jinping at this month’s APEC summit in South Korea. Global markets slumped as investors feared another protracted trade battle.
The dispute deepened over the weekend. U.S. Trade Representative Jamison Greer revealed that Washington tried to arrange a phone call with Beijing after China expanded its rare‑earth controls, but China “deferred” the request. Greer said the U.S. learned of the controls through public sources and viewed Beijing’s action as a “power grab.” Meanwhile, state broadcaster CCTV reported that China defended the controls as necessary to prevent military misuse of critical minerals while accusing the United States of blacklisting Chinese firms and levying port fees. Trump’s reaction—100 % tariffs and a threat to cancel his meeting with Xi—has rattled markets.
These developments have real economic consequences. Customs data released on Monday showed China’s rare‑earth exports fell 31 % in September to 4,000.3 tonnes—the lowest level since February—after the government tightened controls. The data is aggregated and does not specify which countries were affected, but exports have declined for three consecutive months and are unlikely to recover while the controls remain in place. Analysts warn that China’s decision to expand export controls could further squeeze global supply just as the U.S. imposes higher tariffs.
China’s State Media Narrative: Export Controls, Not a Ban
China’s official media and government outlets are uniformly framing the recent rare-earth export restrictions as a legal, measured refinement of export control rather than an all-out ban. Here’s how the message is being conveyed:
Overall Tone & Framing
The Ministry of Commerce repeatedly emphasizes that these are normal legal measures, under the Export Control Law and the Dual-Use Items Export Control Regulation, intended to protect national security and interest—not to shut off trade.
“This is the Chinese government, in accordance with laws and regulations, improving its export control system as a normal step.”
“Export control is not prohibition of export.”The message stresses that legitimate, compliant demand will continue to be met via licensing pathways. It also rejects the notion that the controls are targeted at any specific country.
Key Announcements & Scope
Ministry of Commerce Announcement No. 61 (Oct 9, 2025)
Controls will apply to “overseas-related rare-earth items” — i.e. items processed or integrated abroad but containing Chinese-origin rare earth content.
If a foreign product includes any item from “List 1, Part 1” (rare-earth materials) that is ≥ 0.1 % of value, it must obtain a dual-use export license.
Technologies related to rare-earth processing (including designs, process specifications, data) used abroad are also covered.
Ministry of Commerce & Customs Announcement No. 57 (Oct 9, 2025)
Imposes customs declaration/marking obligations for certain rare-earth oxides, compounds, magnets, etc.
Launch date: November 8, 2025
Requires exporters to mark whether an item is a dual-use item in customs forms; failing to clarify may delay release.
Ministry of Commerce Announcement No. 62 (Oct 9, 2025)
Focuses on export controls over rare-earth technologies: refining, alloying, magnetic material manufacturing, recycling.
Covers technical data and blueprints, process parameters, simulation data and other “technology carriers.”
Even if a product or technology itself isn’t listed, if it is “knowingly used to assist overseas rare-earth processing/production,” licensing is required.
Implementation & Messaging Strategy
China’s media emphasize “permitting, not prohibiting”, promising licensing facilitation and advising export firms on how to identify and declare affected items.
Authorities offer a transition window and clearly state the November 8 effective date to allow adjustment.
China frames the move defensively: a legal system improvement, not a retaliation or weaponization of resources.
A strong emphasis is placed on “traceability” and “oversight”: export, re-export, overseas operations — all under visibility.
Key Statements in Chinese State Media
“This is the Chinese government, in accordance with laws and regulations, improving its export control system as a normal step.”
“Export control is not prohibition of export.”
“If value ratio reaches 0.1 % or above, a dual-use export license is required.”
“The technologies and carriers include … process parameters, process programs, simulation data, etc.”
“Implementation begins November 8, 2025 — with the control list adjusted simultaneously.”
Why This Matters & What to Watch
China is attempting to strike a balance: introducing stringent controls while avoiding the perception of a weaponized resource embargo. The 0.1 % threshold, domain-agnostic language, and continued licensing pathway are intended to buttress its credibility internationally.
From an external observer’s vantage:
How the U.S. and other major importers respond (via tariffs, countermeasures, WTO challenges) could test the resilience of China’s framing.
The actual licensing rate, approval speed, and clarity of rules will determine how disruptive this is to supply chains.
Watch whether the Chinese media hold firm to the “restraint & legality” framing or shift to more overt nationalist rhetoric.
Take: Now the ball is in President Trump’s court and he is likely to navigate between tough economic sanctions and his political base demanding a trade deal for more stable economic growth. It’s undeniable that President Trump will retaliate in some form or another as he wouldn’t want to appear weak in the face of sweeping rare earth export controls. Market volatility: Very high.
China’s September trade beats forecasts despite tariff threats
China’s customs data showed that exports grew 8.3 % year‑on‑year in September—the fastest pace since March—while imports rose 7.4 %, their quickest increase since April 2024. Economists surveyed by Reuters had expected far lower growth. Analysts noted that Chinese firms have been diversifying away from the United States, which now accounts for less than 10 % of China’s direct exports. That’s the clear trajectory of economic decoupling between U.S. and China that has been underway for a while and is set to accelerate.
Trump’s 100 % tariff threat is expected to add pressure, but Beijing is banking on increased sales to Asia, Africa and Latin America to sustain growth. The data also showed that China’s trade surplus fell to $90.45 billion, well below August’s $102.33 billion.
South China Sea: Water‑cannon clash between China and the Philippines
Tensions flared again in the Spratly Islands. The Philippine coast guard reported that a Chinese coast‑guard ship fired a water cannon at the BRP Datu Pagbuaya, a fisheries patrol vessel, then rammed its stern, causing minor damage. The incident occurred near Thitu Island (Pag‑asa), an island garrisoned by the Philippines but claimed by Beijing. Video released by Manila showed water cannon blasts and the Chinese vessel briefly colliding with the Filipino ship.
China blamed the Philippines, saying the Philippine vessel ignored warnings and “dangerously approached” its ship. The collision is part of a pattern of confrontations in the South China Sea, where a U.N.‑backed tribunal has ruled China’s expansive claims have no legal basis. Philippine coast‑guard chief Admiral Ronnie Gil Gavan said the incident strengthens Manila’s resolve to “not surrender a square inch” of territory.
Pakistan–Afghanistan border clashes leave dozens dead
In the most serious fighting since the Taliban took power in 2021, overnight border clashes between Pakistan and Afghanistan left dozens of fighters dead. Pakistan’s military reported that 23 Pakistani soldiers were killed, while the Taliban said nine of its fighters died. Each side claimed much higher casualties for the other, but those figures could not be independently verified.
The violence started after Pakistan conducted airstrikes in Kabul and eastern Afghanistan, which Pakistani officials have not publicly acknowledged. Afghan troops retaliated, and Pakistan responded with gun and artillery fire. Pakistan closed all major border crossings, including Torkham and Chaman, as well as several minor posts. Kabul said it halted attacks after requests from Qatar and Saudi Arabia, but sporadic gunfire continued. The clashes highlight the fragile security situation along the Durand Line and may complicate Pakistan’s ties with the Taliban, especially after India’s recent move to upgrade relations with Kabul.
Thank you for reading!