Asia
China
Ministry of Industry and Information Technology proposes new rare earth regulating measures
On February 19, China’s Ministry of Industry and Information Technology began a public consultation, ending on March 21, on a new set of draft measures intended to regulate the mining, smelting, separation and tracing of the country’s rare earth resources. These draft measures follow the introduction of new regulations on the administration of rare earth resources in October last year. If implemented, they will include: the introduction of a new management mechanism to regulate the mining, smelting and separation of rare earth resources; implementation of production quotas; establishment of traceability systems; data security and reporting obligations, among other requirements.
Impact: Rare earth resources are widely used in advanced technology products such as consumer electronics and hybrid vehicles. Tightened scrutiny over the production, transfer and end use of these critical resources could potentially impact input availability and costs, and lead to supply chain disruptions in relevant industries. Businesses may seek to diversify their supply chains to mitigate these impacts.
Tariffs on certain US imports announced
On February 10, tariffs imposed by China on certain US imports entered into force. These tariffs are additional to existing duties, and cannot be exempted or reduced under existing policies. The tariffs include:
- 15% Tariff: Coal and liquefied natural gas
- 10% Tariff: Crude oil, agricultural machinery, large-displacement automobiles, and pickup trucks
Specific articles subject to the additional tariffs are listed in the annexes to the announcement.
Impact: The tariffs on US imports may lead to increased costs for the commodities in question, potentially disrupting supply chains and raising prices. This may prompt shifts to domestic or alternative suppliers, and may lead to further retaliatory measures such as additional tariffs imposed by the US.
Ministry of Commerce announces export controls on various critical metals
On February 4, China’s Ministry of Commerce announced new export controls on items related to tungsten, tellurium, bismuth, molybdenum, and indium, effective immediately. Exports of any of these controlled items out of China without valid licenses will be prohibited.
These rare metal-related items are used in the defense and clean energy industries, among others, for a wide range of uses, such as in the manufacture of:
- phone screens and television displays
- fiber-optic technology
- artillery shells, armor plating and cutting tools
- solar panels and memory chips
Impact: Businesses engaged in the export of these products from China are required to apply for an export license in accordance with China’s Export Control Law and its subsidiary regulations governing the export of dual-use items and technologies (i.e. those that have both military and civilian applications).
As China is a key supplier of these materials, the new restrictions are likely to cause disruptions to industrial supply chains.
Ministry of Commerce proposes restrictions on battery and critical mineral technology exports
On January 2, China’s Ministry of Commerce (MOFCOM) issued proposed amendments to the Catalogue of Technologies Prohibited or Restricted from Export, for public comments until February 1. Among other amendments, it is proposed that certain technologies used to process lithium, gallium, and to manufacture battery components, will be subject to export controls. MOFCOM has not announced if and when the revised catalogue will come into effect.
Impact: Impact: If implemented, the restrictions could pose supply chain challenges for manufacturers planning to use Chinese technology to extract or process materials critical for the production of electronic and other key equipment. The restrictions could also impact on Chinese businesses currently deploying such technologies to expand their operations outside China.
Implementation Plan on Accelerating the Deployment of Clean and Low-Carbon Hydrogen in the Industrial Sector
On December 30, the Chinese Government released an implementation plan to promote the use of low-carbon hydrogen in industrial sectors. Building on the 2021-2035 Hydrogen Energy Industry Plan, the plan sets targets on, among others, large-scale use of low-carbon hydrogen in metallurgy, ammonia/methanol synthesis, and refining by 2027. The plan emphasizes technological innovation and cost reduction in the use of such renewable energy, and the development of relevant energy infrastructure, to be supported by financial incentives.
Impact: China’s low-carbon hydrogen policies will diversify energy sources in the market, potentially reducing production costs through innovation, and enhancing supply chain resilience with localized green hydrogen. This will lead to more sustainable and efficient industrial processes, boosting competitiveness in both domestic and international markets.
For more information, please see our briefing.
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