China intensified rare ground export control on Thursday in a rare move that could have widespread consequences for global supply chains and both traditional and crypto market mood.
China’s Ministry of Commerce announced sweeping new export restrictions on rare soil materials, treatment technologies and derivative products used in semiconductors, AI systems and defense.
The new rules set to take effect on December 1st require foreign companies that export products containing Chinese origin of rare earth elements or related technologies-inclusive them outside China-to get a license for double use from the Ministry of Commerce (MOFCOM).
This is an important escalation as China dominates the global production of rare earths that are important in everything from everyday electronics to fighter jets. Potential supply chain restrictions from this step could not risk being a risk, especially in AI shares, and leading investors to hedge portfolios. A potential risk-off in AI shares could be wasted into the crypto market.
“China just weapons with rare earths – again, but this time globally,” said geopolitical strategist Velina Tchakarova at X, referring to the new rules.
“The move effectively gives Beijing a veto power over parts of the global chip, EV and defense supply chains, including those operating outside its territory. Licenses will be refused to military or AI-related uses, especially 14 NM chips, 256-layer memory and military degree AI systems,” she added.
According to Tchakarova, the new rules can cause disturbances in supply across EVs, turbines and semiconductors, resulting in price increases.
The latest step is likely to provide Beijing leverage in trade negotiations with the United States. It comes in front of an expected meeting between Chinese President Xi Jinping and President Donald Trump on the sidelines of the Apec summit in South Korea later this month.
