BANGKOK – China’s state security agency has announced efforts to combat alleged smuggling of rare earth minerals, claiming these activities threaten national security. This announcement comes just weeks after China and the United States reached an agreement to facilitate easier access for American firms to obtain these materials from China, which are essential for manufacturing and computer chip production.
The Ministry of State Security, as reported in the state-run Global Times on Friday, accused foreign “espionage and intelligence agencies” of collaborating in schemes to illicitly acquire rare earth-related goods. These goods have been allegedly repackaged and relabeled to obscure their Chinese origin.
The report detailed various tactics used in the smuggling operations, including false declarations classifying the minerals as non-controlled items, mislabeling them as innocuous products like “solder paste,” and blending them with other materials such as ceramic tiles. Additionally, the minerals have allegedly been concealed within plastic mannequins or hidden in bottled water.
It referred only to an unnamed “certain country” that it said lacked the capacity to make and refine its own rare earths.
Investigations had found Chinese criminals were involved, exploiting shipping and delivery channels to evade controls on exports of the materials used in many high-tech applications including electric vehicle batteries, it said.
The crackdown followed a report by Reuters earlier this month detailing how rare earths were being transshipped to the U.S. via Thailand and Mexico.
China is the main source for many strategically vital rare earths and it has moved to slow exports of such minerals in retaliation for steep import duties President Donald Trump has imposed on Chinese goods since he returned to the White House and launched his crusade to overturn a global trading system he says is unfair to the United States and its workers.
That followed an earlier series of restrictions by Beijing on exports of such materials as gallium, germanium, antimony and tungsten in response to trade friction with the administration of then-President Joe Biden.
In April, Beijing imposed permitting requirements on seven rare earth elements, under a Chinese law that applies to all exports, not just those bound for the U.S. market.
With the permitting process taking 45 days, the new requirement caused a pause in shipments, threatening to disrupt production of cars, robots, wind turbines and other high-tech products in the U.S. and around the world. The U.S., meanwhile, added to restrictions on exports of advanced technologies to China.
Rare earths have remained at the center of China-U.S. talks aimed at staving off huge tariff increases that were postponed in May to allow time for negotiations on a broader trade agreement. The deadline for reaching a deal is Aug. 12.
An agreement announced in late June did not remove China’s permitting requirement on rare earths, but Beijing agreed to flexibility in dialing up or down the approval process as needed.
Computer chips are another key bone of contention.
The Chinese Commerce Ministry said Friday that it had taken note of a decision by the Trump administration to lift restrictions on exports of key semiconductors used in artificial intelligence made by Nvidia and its rival Advanced Micro Devices.
In April, the Trump administration announced it would restrict sales of Nvidia’s H20 chips to China — as well as MI308 chips from AMD.
But Commerce Ministry spokesman Wang Wentao said restoring healthy trade ties will require more action by Washington.
U.S. export controls on Ascend chips made by Chinese tech giant Huawei Technologies have hurt the interests of Chinese companies, Wang told reporters in Beijing.
“We hope that the United States and China will meet each other halfway and correct their wrong practices through equal consultation, create a good environment for mutually beneficial cooperation between enterprises of both sides, and jointly maintain the stability of the global semiconductor production and supply chain,” he said.
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