BEIJING, Feb 27 (Reuters) – Almost a year after China expanded rare-earth export controls ostensibly aimed at preventing their use by foreign militaries, exporters are still asking a basic question: when does a small magnet turn an everyday product into a controlled item?
Makers of products ranging from pill boxes, printed billboards, motor components and optical glass are among the growing number of companies that have queried the commerce ministry over whether they require export licences.
Beijing is expanding export enforcement manpower and imposing compliance nationwide, even as it raises costs for domestic firms and makes it harder for them to ship goods.
A Reuters review of over 200 public export-control compliance enquiries to China’s commerce ministry between 2019 and the start of this month showed a stark surge after rare-earth controls were tightened last April.
In the meantime, Washington has eased some export restrictions on products like advanced artificial-intelligence chips during President Donald Trump’s second term, after China’s curbs on rare earths exports threatened to hobble global supply chains spanning autos, technology, energy, aerospace, and defence.
The export controls on both sides are expected to be in sharp focus as Trump and Chinese President Xi Jinping meet in Beijing in late March for their second in-person talks since Trump returned to office, setting up a high-stakes test of whether a fragile trade truce between the world’s two largest economies can hold.
“What we are seeing in China is … the rapid construction of a comprehensive export-control apparatus designed to weaponize chokepoints across strategic and non-strategic sectors,” said Alfredo Montufar-Helu, a Beijing-based managing director at Ankura Consulting. “That the U.S. is reining in some of its controls is a direct acknowledgement of China’s growing leverage.”
China’s commerce ministry did not respond to a request for comment.
EXPORT COMPLIANCE QUERIES JUMP
Exporters have flooded the Chinese commerce ministry’s website with urgent compliance questions: whether magnetic sheets cross rare-earth thresholds; whether gallium nitride chips are restricted; whether ultraviolet medical equipment counts as controlled technology.
From 2019 through 2024, only 43 export-control compliance enquiries were posted publicly. In 2025 alone, the number jumped to 135, with about 16% of them complaints about issues such as shipment delays and increased regulatory burdens. The rate of complaints nearly doubled in early 2026.
The actual number of queries from exporters is likely to be orders of magnitude larger as there are several private channels these companies can use, including contacting provincial and municipal commerce bureaux, many of which do not have public query platforms like the central government’s commerce ministry.
The official responses to the queries from Chinese exporters have been vague and formulaic, stopping short of confirming whether any individual product, from rare-earth magnets to medical materials, required a licence.
The enforcement push is also legal and bureaucratic. Since China enacted its Export Control Law in October 2020, it has introduced or expanded export control measures 29 times, compared to just six times between 2015-2020.
Recruitment documents show 45 commerce ministry posts available in this year’s national civil-service examination could be assigned to export-control-related work, compared with 11 such vacancies in both 2022 and 2023.
Dozens of provincial and municipal governments have organised compliance seminars and policy briefings over the past year, while Beijing has convened national export-control work conferences bringing officials from across the country to the capital.
Beijing’s October 2025 revision to its rare-earth export-control regime reflected lessons from the U.S. Foreign Direct Product Rule, which allows Washington to assert jurisdiction over certain foreign-made goods produced with American technology.
“China’s use of rare earths as leverage is completely learned from the West – especially the U.S.,” said Li Xing, professor at the Guangdong Institute for International Strategies, a think tank in Guangzhou.
China dominates the processing of rare earths, the conversion of ore into refined oxides and metals used in electric vehicles, wind turbines and defence systems, a chokepoint deeper in the supply chain than mining itself.
Its new licensing system reaches into processing and downstream incorporation.
“This is not just a supply chain shortage. This is economic warfare,” said Nick Myers, chief executive of U.S. rare-earth startup Phoenix Tailings.
PACE OF U.S. EXPORT CONTROLS SLOWS
During Trump’s first term and under President Joe Biden, the United States rapidly expanded export controls targeting China.
Annual China-related additions to the Entity List, which requires U.S. exporters to obtain licences, often reviewed under a presumption of denial, surged from 47 in 2018 to 227 in 2020, reaching a record 257 in 2024, according to a Reuters analysis.
Since Trump’s return to office, that trajectory has reversed. China-related Entity List additions fell to 131 in 2025, roughly half the previous year’s pace.
Earlier this month, the Pentagon briefly published, then withdrew, an updated Military End User list that would have added Chinese tech giants Alibaba and Baidu while removing a couple of memory chipmakers.
The White House and the U.S. Commerce Department’s Bureau of Industry and Security did not respond to requests for comment. A Pentagon official said the list was removed as it may require changes based on new information and that an updated list would be published, without further elaborating.
The moderation has drawn criticism from bipartisan U.S. lawmakers, who have faulted the administration for approving certain Nvidia AI chip exports and cutting BIS funding.
A Nvidia spokesperson said in a statement that criticism of the current administration’s decision to greenlight these semiconductor shipments to China was unintentionally promoting the interests of foreign competitors.
“America should always want its industry to compete for vetted and approved commercial businesses, and thereby protecting national security, creating American jobs, and keeping America’s lead in AI,” the spokesperson said.
Nvidia CEO Jensen Huang, who criticised Biden-era controls, said last year that “export control was a failure” and that Trump “realises it’s exactly the wrong goal.”
(Reporting by Eduardo Baptista; Editing by Miyoung Kim and Jamie Freed)
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