Highlights

• China's MOFCOM has issued six sweeping decrees expanding control over rare earths, lithium batteries, and superhard materials, with extraterritorial jurisdiction over products containing even 0.1% PRC-origin materials.
• Mayer Brown's legal briefing reveals China's measures mirror the U.S. Foreign Direct Product Rule but with wider scope, turning material purity into geopolitical leverage rather than mere trade policy.
• The new 0.1% threshold forces global manufacturers to audit trace-level PRC content in every magnet and battery transaction, creating massive compliance burdens across electronics, defense, and semiconductor sectors.

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Tuning the rules of trade into a weapon?  This is the case for China suggests global white-shoe law firm Mayer Brown (opens in a new tab), founded in Chicago, Illinois, United States--with offices in 22 cities in 10 countries throughout the Americas, Asia, Europe, and the Middle East, with its largest offices being in Chicago, Washington, D.C., New York City, and London.   The firm’s October 9 client briefing, “PRC Announces New Export Controls on Rare Earth and Battery Materials and Technology,” is not another dry legal update—it reads like the legal codification of a global power shift. As Rare Earth Exchanges (REEx) reported, Beijing’s Ministry of Commerce (MOFCOM) has rolled out six sweeping decrees expanding its control over rare earths, lithium batteries, and superhard materials, effective in stages through December 1, 2025.

As noted in the REEx platform, for the first time, China asserts extraterritorial jurisdiction over products made outside its borders that contain—even in trace amounts (≥0.1%)—PRC-origin rare earths or technology. It’s a mirror image of Washington’s own _Foreign Direct Product Rule_—but with a wider scope and fewer exemptions.

The Legal Facts: Tight, Technical, and True

Mayer Brown’s summary is precise. Each cited provision aligns with MOFCOM’s official statements: immediate controls on rare-earth mining technologies, November 8 implementation for lithium battery and graphite materials, and December 1 enforcement of extraterritorial rules. The description of the “50% rule”—denying export licenses to affiliates majority-owned by listed entities—is consistent with language in China’s Announcement No. 61.

Likewise, the practical implications ring true: electronics, defense, and semiconductor sectors will face new licensing and documentation burdens. Mayer Brown accurately notes that the 0.1% de minimis threshold could pull countless foreign-made magnet assemblies into China’s legal orbit.

Where Interpretation Meets Intention

The briefing’s neutrality begins to blur as it implies equivalence between China’s measures and U.S. export regimes. While it’s true both nations use “dual-use” justifications, MOFCOM’s new rules are not purely reciprocal—they’re coercive tools of statecraft. The memo published via JD Supra stops short of calling that out, treating escalation as procedural symmetry rather than a deliberate geopolitical maneuver.

The piece also avoids the elephant in the room: the credibility of enforcement. China’s licensing system is opaque, and historically, license denials and delays have served as political levers rather than administrative oversight.

The Rare Earth Chain Reaction

For global supply chains, the impact is seismic. The 0.1% rule effectively embeds China in every magnet or battery transaction on Earth. Western manufacturers must now map exposure down to trace levels of PRC content—an auditing nightmare and a compliance bonanza for trade lawyers.

Mayer Brown’s analysis, though accurate, understates the shift in leverage: Beijing has turned material purity into geopolitical policy. This is not just about trade—it’s about control.

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