China is expanding its export controls beyond rare earths to include critical supply chains such as solar equipment and battery materials, leveraging supply chain bottlenecks as a new economic weapon, according to analysis.
The Washington Post reported on June 16 that the Chinese government is broadening the scope of its export controls to various sectors, including rare earths, solar equipment, and battery materials, as part of its strategy to weaponize supply chains.
Last year, in retaliation against tariffs imposed by then-President Donald Trump, China implemented restrictions on rare earth exports. The Post noted that "China's continued expansion of export controls appears aimed at pressuring the U.S. while enhancing its own political leverage and maintaining its industrial competitiveness."
A recent survey by the U.S.-China Business Council revealed that over one-third of its member companies reported suffering from China's export controls in the past year, with automotive and logistics sectors experiencing the most significant impacts.
Market research firm Rhodium Group stated in a recent report that "raw ore and refined minerals are just the tip of the iceberg," highlighting China's influence across the manufacturing of intermediate goods, including silicon wafers, permanent magnets, light-emitting diodes (LEDs), and battery materials.
Kabil Boulenuah, a vice president at Rhodium Group, told the Post that "these export controls are not merely retaliatory measures but a means for China to maintain its dominance over supply chains."
In addition to rare earths, solar manufacturing equipment has emerged as a new "bottleneck" for China. According to the Post, China controls over 80% of the world's solar manufacturing capacity. Data from the China Photovoltaic Industry Association indicates that by 2024, China will produce 92% of solar cells and 97% of wafers, a key component of solar panels.
With the surge in electricity demand driven by the expansion of artificial intelligence (AI), the U.S. will need to secure predominantly Chinese-made equipment to rebuild its domestic solar supply chain.
Elon Musk has announced plans to expand solar manufacturing capacity in the U.S. to 100 gigawatts (GW) and began negotiations earlier this year to purchase equipment from Chinese solar manufacturer Suzhou Maxwell. However, these negotiations have reportedly stalled. In March, Chinese authorities instructed Suzhou Maxwell to halt discussions with Musk's team and refrain from selling equipment for the time being.
Tu Qian, a professor at Beijing International Trade and Economic University, remarked to the Post that "selling solar manufacturing equipment is akin to providing tools for other countries to target China," interpreting that China aims to avoid repeating past mistakes where the U.S. allowed the outflow of industrial manufacturing technology and capital.
However, there are concerns that overly stringent controls on advanced technology exports could inadvertently encourage self-sufficiency among rival nations, potentially backfiring on China in the long run.
In fact, following China's export controls on rare earths, the U.S. and its allies are accelerating efforts to restructure supply chains to reduce dependence on China. Hanwha Q CELLS, which has production facilities in the U.S., stated last August that "the recently established supply chain is entirely non-Chinese."
* This article has been translated by AI.
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