China Considers Export Ban on Rare Earth Technologies 

Rare earth magnets, such as those installed in wind turbines or e-cars, derive almost exclusively from Chinese production. According to media reports, the Middle Kingdom is considering banning the export of technology needed for their production. This could further fuel trade disputes with the U.S. and other Western economic powers.

The Chinese government is considering banning exports of rare earth technologies used in the production of wind turbines and electric motors. According to a report by Nikkei Asia, the Chinese government wants to restrict the exports to protect its domestic market and drive technological progress at home. Demand in China for rare earth products used in the country’s domestic wind power and e-mobility sectors is growing. The Middle Kingdom, which already ranks among the world’s leaders in renewable energies, wants to further ramp up its share of green electricity resources. The country’s booming EV industry also relies on rare earth magnets.

Reaction to western export controls

The Chinese decision may be a reaction to growing export restrictions by Western countries on computer chips and other high-tech products. In recent months, the U.S. and other countries have tightened export controls to limit China’s access to key technologies. The trade dispute has so far culminated in the so-called chip war, which makes it more difficult for China to import sophisticated microchips. The Chinese government sees the move as a threat to its economy and, in return, wants to reduce its dependence on Western technologies.

Impact on the world economy

China is the largest producer of rare earth metals and controls over 90% of their processing. Restricting exports could drive up prices for these raw materials and hamper the production of high-tech devices worldwide. This trend is confirmed by a new OECD report, which shows that an increasing number of countries are placing critical raw materials such as rare earths under export restrictions. According to OECD findings, around 10% of the world’s export value is affected by at least one export restriction measure. In addition to China, countries such as India, Argentina, Russia, Vietnam, and Kazakhstan are also closing off access to their raw materials markets. These developments could inhibit technological progress and complicate the transition to a more sustainable economy, the OECD analysis says.