China sanctions 6 US firms as tensions boil over trade, TikTok sale

 China announced trade sanctions for six American companies on Thursday, another flare-up in its wide-ranging rivalry with the United States as the two countries prepare for a hotly anticipated meeting between their leaders.

According to a statement from Beijing’s Ministry of Commerce, three US companies were added to the “unreliable entity list”, effectively banning them from trade and investment in China.

The affected enterprises – unmanned vehicle firm Saronic Technologies, satellite company Aerkomm and subsea engineering firm Oceaneering International – have “engaged in so-called military-technical cooperation with Taiwan, severely undermining China’s national sovereignty, security and development interests” despite strong opposition, the ministry said.

“China has always handled the list with prudence, targeting a small number of foreign entities that endanger our national security in accordance with the law. Honest and law-abiding foreign entities have no cause for concern.”

After a phone call between the two leaders last week running nearly two hours, US President Donald Trump said that he plans to meet Chinese leader Xi Jinping next month on the sidelines of the Asia-Pacific Economic Cooperation Summit in South Korea.

The two countries have clashed over a variety of issues since Trump began his second term in January, most notably a rapid escalation of tariff rates in April and the impending sale of the Chinese social media platform TikTok to US investors.

Three other American firms – shipbuilder Huntington Ingalls Industries, engineering and construction manager Planate and services provider Global Dimensions – were added to the export control list, preventing them from receiving shipments of items from China determined to have military and civilian applications.

That has turned critical minerals into an important negotiating tool. Earlier this year, when US-China trade tensions escalated, Beijing – which controls the vast majority of rare earth extraction and refining infrastructure – leveraged its position to secure concessions from Washington on the export of certain advanced computer chips.

In July, Washington announced the two countries had agreed on a framework to facilitate rare earth shipments, following earlier talks in Geneva.

It also doubled down on efforts to develop its domestic mining and refining infrastructure, with the Pentagon investing US$400 million in July to become the largest shareholder of MP Materials.

Analysts have cast doubt on whether Chinese leaders would drop their trump card. In August, Beijing announced tighter rules over the mining and processing of the critical minerals, issuing detailed guidelines to government agencies.

The EU remained the largest buyer of Chinese permanent magnets in August. The 2,582 tonnes exported to the 27-country bloc accounted for 42 per cent of shipments, a 21 per cent month-on-month increase following a more than 50 per cent rise in July.

Despite the uptick, the EU Chamber of Commerce in China reported last Thursday that some European companies had suspended production due to a shortage of rare earths, with seven affected in August and another 46 expected to face stoppages this month.

By September 9, China had approved 19 of 141 rare earth export license applications filed by chamber members, with 121 still pending, according to the chamber.

“Obtaining export licences for rare earth elements is currently the most pressing issue for many of our members, with the agreed EU-China mechanism so far only easing the situation for some,” the Chamber’s President Jens Eskelund said.

“Companies need a long-term sustainable solution, with a clear, predictable and reliable process, so they can make their sourcing decisions with certainty. This would also go some way to alleviating EU-China trade tensions.”

China boasts large reserves of rare earths and is the world’s largest manufacturer and exporter of permanent magnets.

The country mines about 70 per cent of all rare earth elements and accounts for over 90 per cent of global processing capacity for the more valuable heavy varieties.

https://www.scmp.com/economy/china-economy/article/3326411/chinas-rare-earth-magnet-exports-us-decline-amid-trade-war-uncertainty