The long-running US-China technology rivalry has intensified once again. The United States has introduced new measures to close loopholes in its export restrictions, targeting Chinese tech companies’ access to advanced technologies. In response, Beijing has hit back with stricter controls on rare earth exports, heightening global supply chain concerns.
US Expands Tech Restrictions
The US Commerce Department has issued a new rule that extends export restrictions to any subsidiary at least 50% owned by a sanctioned company on its Entity List. This change aims to stop firms like Huawei, YMTC, and DJI from using subsidiary companies to bypass trade restrictions and continue acquiring restricted American technology.
The expanded measures cover critical sectors such as artificial intelligence (AI), advanced semiconductors, robotics, and manufacturing equipment. According to the US government, the restrictions are meant to protect national security and prevent “dual-use” technologies from supporting China’s military or surveillance programs.
This move follows a recent Congressional report revealing that inconsistencies in export policies among US allies particularly Japan and the Netherlands allowed Chinese firms to purchase around $40 billion worth of advanced chipmaking tools last year. US lawmakers are now calling for more unified and coordinated restrictions among allied nations.
China’s Retaliation: Rare Earth Export Crackdown
Beijing’s response has been swift and strategic. China’s Ministry of Commerce condemned the US actions as “extremely malicious” and accused Washington of “unreasonable suppression” of Chinese companies. Soon after, Beijing announced new restrictions on the export of rare earth technologies, which are essential for modern electronics, renewable energy, and defense industries.
The new rules expand controls over rare earth mining, processing, and magnet-making technologies, as well as the equipment used in these processes. Foreign firms that use Chinese rare earth components must now seek official approval before exporting or reusing them. Analysts note that this mirrors the US’s own tech export controls, effectively making rare earths a powerful geopolitical tool.
China has also stated that export licenses will not be granted to overseas defense users, while approvals for semiconductor-related applications will be case-by-case. The move underscores Beijing’s intent to use its dominance in rare earth production as leverage in the ongoing tech standoff.
Global Impact and India’s Position
The effects of this escalation are already being felt worldwide. Reports suggest that China has demanded a guarantee from India that Chinese-supplied rare earth magnets will not be re-exported to the United States. India has reportedly declined the demand, highlighting how Beijing is using its control over rare earth materials to pressure other nations.
Technology vs. Materials: A New Power Balance
At the heart of the dispute lies a growing divide: the US controls high-end technology, while China dominates essential raw materials. Washington seeks to limit China’s access to advanced computing and chipmaking tools, while Beijing is tightening its grip on the rare earths required to build those same technologies.
This power struggle is reshaping global supply chains, pushing companies to diversify sourcing and rethink production strategies. As both sides double down, the world’s technology and manufacturing sectors face a new era of uncertainty.
