China's new rare earth export curbs could hit Taiwan hard: Expert

Taipei, Oct. 12 (CNA) Taiwanese industries could face significant disruption from China's newly tightened export controls on rare earth elements, as much of the island's supply indirectly depends on Chinese materials processed in Japan, a local expert warned Sunday.

Kristy Hsu (徐遵慈), director of the Taiwan ASEAN Studies Center at the Chung-Hua Institution for Economic Research, said that China's latest export measures go far beyond targeting the United States and will likely affect any country that uses Chinese rare earths or related technologies.

With Japan and Southeast Asian countries among those expected to be hit, Taiwan could feel the impact through its reliance on Japanese-made semi-finished products and components that often involve Chinese-sourced rare earths or refining processes, Hsu said.

China on Oct. 9 announced sweeping new export restrictions requiring companies worldwide to obtain licenses if their products contain more than 0.1 percent Chinese-origin rare earth materials in value. The new rules also place semiconductor, artificial intelligence, and defense-related technologies under strict case-by-case review.

According to Hsu, the scope of Beijing's latest rules closely mirrors the U.S. "Foreign Direct Product Rule" (FDPR), which Washington uses to regulate the global use of American technologies.

She noted that China's move marks a major escalation from past restrictions, both in terms of breadth and in its potential global reach.

If fully enforced, the measures could trigger sharper price surges and more aggressive stockpiling in the global market, Hsu added.

Unless China later adjusts its policies, the overall impact will be substantial -- though how strictly Beijing will implement the new rules remains uncertain, she said.

According to data from the U.S. Geological Survey (USGS), China produced 270,000 tons of rare earths in 2024, accounting for nearly 70 percent of global output, far ahead of the 45,000 tons produced by the United States, which made up about 11 percent of the total.

China controls nearly 90 percent of global rare earth refining capacity, with significant leverage in the global market, business insiders said.