1. Legal Basis and Regulatory Framework

China's rare earth export control regime is built on two primary legal instruments:

• Export Control Law of the People's Republic of China (2020) – Establishes the unified legal regime governing control policies, control lists, temporary controls, and supervisory mechanisms

• Regulation on the Export Control of Dual-Use Items (2024) – Provides the detailed framework for controlling dual-use items, including extraterritorial jurisdiction provisions under Article 49

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2. Key Policy Measures – Announcement No. 61 (October 9, 2025)

Announcement No. 61 extended export control requirements to foreign entities and overseas transactions for specific rare earth items. Its core provisions include:

2.1 Extraterritorial Jurisdiction – Three Scenarios Requiring Chinese Licenses

Foreign organizations and individuals must obtain a dual-use item export license from China's Ministry of Commerce (MOFCOM) before exporting to countries/regions outside China in the following cases:

Scenario 1 – The "0.1% De Minimis Rule":
Foreign-manufactured products listed in Annex 1, Part II that contain, integrate, or are mixed with Chinese-origin items from Annex 1, Part I, where the Chinese-origin materials account for 0.1% or more of the product's value

• Covered Chinese raw materials: Samarium metal, dysprosium metal, gadolinium metal, terbium metal, lutetium metal, scandium metal, yttrium metal, samarium-cobalt alloys, terbium-iron alloys, dysprosium-iron alloys, terbium-dysprosium-iron alloys, dysprosium oxide, terbium oxide

• Covered foreign-made products: Samarium-cobalt permanent magnets; NdFeB magnets containing terbium or dysprosium; rare earth targets (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium-containing)

Scenario 2 – Technology Origin Rule (China's version of "FDP Rule"):
Foreign-manufactured Annex 1 items produced using Chinese-origin technologies related to rare earth mining, smelting and separation, metal冶炼, magnet manufacturing, or secondary resource recovery

Scenario 3 – Direct Re-export of Chinese-Origin Items:
Annex 1 items originating from China that are being re-exported from one foreign country to another

2.2 The "50% Ownership Look-Through Rule"

For exports to entities on the Control List or Watch List, the restrictions extend to subsidiaries, branches, and affiliates in which the listed entity holds 50% or more ownership.

Licenses to these entities are generally NOT approved.

2.3 License Review Standards – Generally Not Approved

Export applications are typically rejected for:

Humanitarian Exception: For emergency medical services, public health crises, or natural disaster relief, foreign exporters must report to MOFCOM within 10 working days after export (no license required).

3. Key Policy Measures – Announcement No. 62 (October 9, 2025)

Announcement No. 62 imposed export controls on rare earth-related technologies:

Expanded "Export" Definition: "Export" now includes transfers through intellectual property licensing, investment, exchanges, gifting, exhibitions, inspection, testing, assistance, joint R&D, employment, consulting, and any other means.

4. Suspension Status – Announcement No. 70/2025 (November 7, 2025)

Following US-China trade consultations in Kuala Lumpur, China suspended implementation of the October 9 measures:

• Suspended measures: Announcements No. 55, 56, 57, 58, 61, and 62 of 2025

• Suspension period: November 7, 2025 – November 10, 2026

• What this means:

  • The 0.1% de minimis rule is not currently enforced

  • Foreign manufacturers do not currently need Chinese licenses for re-exports

  • But: The regulatory framework remains in place and could be reactivated

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4.1 What Remains in Effect

Despite the suspension, one key restriction remains active:

• US military end-user ban: The re-export of any Chinese-origin dual-use items (including rare earth permanent magnets) to US military users or for military end-uses remains strictly prohibited under Clause 1 of Announcement No. 46/2024

Example: A German company re-exporting Chinese-origin terbium-containing NdFeB magnets to a US defense contractor – still banned.

5. Practical Supply Chain Impact

Despite the formal suspension, real-world supply chain disruptions persist:

6. Compliance Recommendations for Businesses

Legal experts recommend that relevant enterprises:

1. Monitor the suspension period closely – The measures could be reinstated after November 10, 2026

2. Implement compliance systems in accordance with Announcements No. 61 & 62 requirements during this window period

3. Conduct due diligence on end-users – screen for military affiliations and restricted lists

4. Establish supply chain tracing to identify Chinese-origin rare earth content and technology usage

5. Prepare end-use certifications and maintain documentation for potential license applications

Note: Policies are subject to change. For specific transactions, consult legal counsel familiar with Chinese export control regulations.