China announced the addition of American technology and mining companies MP Materials and USA Rare Earth, alongside eight additional US entities that it claims are linked to the US military, to its official export control list – as reported yesterday by the Reuters news agency.
According to the report, the dramatic step comes as a direct retaliatory action to restrictions imposed by the administration in Washington earlier this month on a series of Chinese companies. Among the companies that entered Beijing's blacklist is also Aveox, a manufacturer of advanced motors for critical missions, a move that will completely halt the transfer of Chinese products defined as "dual-use" (both civilian and military) to these companies.
For the American energy and defense market, this is a particularly sensitive point. MP Materials, which receives support and backing from the Pentagon, operates the only active rare earth mine across the United States. Together with USA Rare Earth, the two companies constitute a critical pillar in a sensitive supply chain that feeds many industries.
The Chinese Ministry of Commerce stated in an official declaration that these steps constitute a response to the "malicious practice of the US government," and that they were taken with the aim of protecting China's national security and interests, as well as to fulfill international obligations regarding the non-proliferation of weapons.
In Beijing, it was clarified that there is an absolute prohibition on organizations and private individuals in any country or region in the world to transfer or supply to these American entities dual-use items originating from China, emphasizing that these export activities must be stopped immediately. The move reflects a significant escalation, as it changes the previous rules – which required only export licenses – and turns them into a sweeping and absolute ban on dual-use exports to these companies.
However, in the global market, there are those who downplay the drama. Analysts estimate that this is a step that is primarily symbolic, designed to constitute a proportionate response to the Pentagon's 1260H list, which points to Chinese technology companies that the Americans claim assist the Chinese military.
That same American list was updated this month and included Chinese giants such as the e-commerce empire Alibaba, the search giant Baidu, and the promising automakers BYD and NIO.
George Chen, managing partner for the Greater China region at The Asia Group, a geopolitical advisory firm, explained that most of the American companies flagged now are players in the defense industry or have close ties to the US government. Since these companies do not conduct business in China anyway, the actual impact will be mostly symbolic.
In parallel with this move, and in a further signal of the worsening crisis, the Chinese Ministry of Finance published a separate announcement stating that it was decided to take sanctions against 46 additional American companies. According to the new guidelines, Chinese buyers are completely prohibited from purchasing any products manufactured by those companies. The only exception allowed at this stage is for US-funded companies that physically operate and manufacture within China, which were permitted to continue purchasing.
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