Co author: Pengcheng Zhou
Overview
China has taken another decisive step to consolidate its dominance in the global rare-earths market. On 9 October 2025, the Ministry of Commerce (MOFCOM) issued two new regulatory notices that significantly expand the scope of the Chinese export-control regime. The measures now cover not only the export of rare-earth metals themselves but also a wide range of downstream materials, components and related technical know-how.
Soon after MOFCOM and the General Administration of Customs released four additional Announcements (No. 55–58 of 2025), all entering into force on 8 November 2025. These extend China’s export-control reach even further — to superhard materials, rare-earth processing equipment and raw materials, medium- and heavy-rare-earth products, and lithium-battery and artificial-graphite anode materials.
In practical terms, China now controls not only the export of rare-earth elements but also the upstream and downstream machinery, chemicals and technologies used to process, refine, or apply them. For European companies in sectors such as defence, medical technology, semiconductors and advanced manufacturing, the result is a complex regulatory environment, longer delivery timelines and a renewed need to re-evaluate contractual, operational and compliance frameworks.
Scope of the New Controls
The initial regime covered seven key elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — including their oxides, alloys and compounds. The measures also extend to manufactured goods such as samarium-cobalt magnets, neodymium-iron-boron magnets containing terbium or dysprosium, and sputtering targets used in coating and sensor technologies.
The new announcements (Nos. 55–58) build upon this foundation:
Together, these four measures make clear that China’s export-control perimeter now extends well beyond rare-earths to encompass dual-use materials and technologies that underpin multiple strategic industries.
Compliance Obligations and the New “Notice” Mechanism
To operationalise the earlier rare-earth regulations, MOFCOM introduced a mandatory Compliance Notice system. Each exporter or supplier of listed materials must provide a declaration to the next recipient in the supply chain, identifying the share and origin of the controlled content and flagging potential licensing requirements for re-exports. Downstream recipients must keep these records and pass them on to their customers.
This mechanism aims to make the flow of controlled materials traceable throughout the global value chain. However, it does not replace due diligence: exporters and manufacturers remain individually responsible for assessing whether their products fall under the Chinese Export Control Law and for securing licences where required.
The regulations also establish the “0.1 per cent rule” — if a product manufactured abroad contains Chinese-origin rare-earth materials representing more than 0.1 per cent of its total value per independently usable unit, its onward export to a third country may also require MOFCOM approval. This unprecedented extraterritorial element illustrates Beijing’s intent to maintain oversight even after materials are processed overseas.
Strategic Context
In explaining these announcements, MOFCOM’s spokesperson (official transcript) underlined that the listed materials and technologies are dual-use in nature — relevant to both civilian and military applications — and that the measures are consistent with international export-control practices, designed to “safeguard national security and fulfil non-proliferation obligations.” At the same time, the spokesperson stressed that compliant export applications will be approved and that China remains “willing to promote and facilitate legitimate trade through bilateral dialogue mechanisms.”
Beyond these formal statements, the strategic motivation is evident. With roughly 90 per cent of global refining capacity located in China, the government is reinforcing its leverage as a price-setter and indispensable supplier. By linking rare-earths, superhard materials and battery inputs within one export-control framework, Beijing ensures continued influence over industries critical to the green transition, semiconductor production and defence systems — all while asserting its regulatory sovereignty over dual-use technologies.
Implications for European Industry
For European manufacturers, the impact is immediate. Products incorporating Chinese rare-earth or battery-related inputs now require transparent documentation of origin and composition. This will increase administrative workload and may delay deliveries, as export-licence processing typically takes up to 45 working days. Stockpiling materials is no viable workaround, since MOFCOM demands clear evidence of end-use and end-user for each shipment.
From a contractual and legal standpoint, supply delays caused by export-control approvals or denials raise complex questions. Traditional force-majeure clauses may not cover such political measures, so contract reviews are essential — particularly for long-term supply or framework agreements.
In M&A transactions, raw-material dependency has become a valuation issue. Buyers increasingly request detailed disclosures on Chinese supply exposure and often build earn-outs or termination rights tied to supply continuity into deal structures.
Beyond compliance and corporate law, the rules are already causing tangible operational disruptions: several European and Asian manufacturers have reportedly had to pause production, implement short “production furloughs,” or schedule extra shifts to compensate for delivery delays. The ripple effects thus extend from legal risk to workforce management and profitability.
Consequences for the EU and Policy Outlook
At the policy level, the European Commission has created a coordination mechanism to collect urgent licensing cases from affected firms and to communicate them to Chinese authorities. While this may streamline dialogue, Europe’s reliance on Chinese refining and magnet production remains substantial.
The latest MOFCOM announcements underscore the urgency for Europe to accelerate implementation of the Critical Raw Materials Act, develop recycling and stockpiling capacity, and deepen strategic partnerships with resource-rich countries. Coordinating trade, security and industrial policy will be essential to safeguard strategic autonomy.
How Taylor Wessing Can Help
Taylor Wessing advises European and international companies on all aspects of China’s expanding export-control regime. Together with our Taylor Wessing China team in Beijing and Shanghai, we assist clients in:
- preparing and coordinating MOFCOM licence applications,
- reviewing and adapting contractual risk allocation and force-majeure provisions, and
- implementing compliance frameworks aligned with both EU and Chinese standards.
Our cross-disciplinary teams combine expertise in export control, corporate / M&A, trade and defence regulation with sector-specific insight in Aerospace & Defence and Life Sciences.
Whether your company is sourcing critical materials, operating in a regulated industry or pursuing cross-border acquisitions, we help ensure regulatory clarity, operational continuity and commercial resilience.
