China targets US rare earth and other firms with export controls

By Liz Lee and Laurie ‌Chen

BEIJING, June 22 (Reuters) - ​China added ​MP Materials and USA Rare Earth as well as eight other U.S. entities it said are linked to the U.S. military to its export control list ‌in retaliation for Washington placing several Chinese companies under restrictions this month.

Aveox, ⁠a motor manufacturer for mission-critical applications, was also among those placed on the list, which halts Chinese dual-use ‌exports to the companies.

Pentagon-backed MP Materials, ‌which operates the only active rare earth mine in the U.S., and USA Rare Earth are both involved in the mine-to-magnet supply chain.

USA Rare Earth said it did not ​have any comment on the matter. MP Materials and Aveox were not available for comment outside of business hours.

The measures are a response to the "U.S. government's malicious practice" and ⁠were taken to safeguard national security and interests, as well as to fulfil international obligations such as non-proliferation, China's Commerce Ministry ​said in a statement on Monday.

"Organisations and individuals in any country or region are prohibited from transferring or supplying dual-use items originating in ​China to those entities," it said, adding that export ‌activities should be stopped immediately.

The move amounts to a full ban on dual-use exports to the named firms, tightening rules that previously only required ⁠export licences.

Analysts said, however, that China's actions were a largely symbolic response to the Pentagon's 1260H list of Chinese tech companies it believes to be aiding the Chinese military. The list was updated this ⁠month to include e-commerce giant Alibaba, internet search provider Baidu, and automakers BYD and NIO.

"Most of the companies ​are U.S. defence industry players or they have close connections with the U.S. government... Those companies are not going to do business in China, so the impact will be quite symbolic," said George Chen, partner ‌for Greater China at the Asia Group, a geopolitical advisory firm.

"Beijing's move today is a proportional response to the Department of War's 1260H ‌list."

In a separate notice, China's finance ministry said it has decided to take measures against 46 U.S. ⁠companies. Chinese buyers are now barred ‌from procuring any products manufactured ​by them, though U.S.-funded enterprises operating in China can still do so.

(Reporting by Liz Lee, Laurie Chen and Shanghai newsroom; Editing by Shri Navaratnam and ‌Edwina Gibbs)

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