China expands export controls: A Briefing for European Companies on the October 2025 measures

Introduction

On 9 October 2025, China's Ministry of Commerce (MOFCOM), in some cases jointly with the General Administration of Customs (GAC), issued a series of announcements that significantly expand and deepen its export control regime. These measures, targeting critical supply chains for rare earths, lithium batteries, artificial graphite, and superhard materials, represent a strategic escalation in the ongoing global trade and technology competition. For European and German companies, the announcements introduce complex new compliance obligations, including far-reaching extraterritorial controls that may apply to goods manufactured and transferred entirely outside of China.

Key Takeaways for European/German Companies

This latest package of export controls marks a significant paradigm shift from previous measures. European and German businesses with global supply chains should immediately assess their exposure based on the following key developments:

• Expanded restrictions for military end-users: The principle of denial for export licenses, previously limited to U.S. military users, now – at least for certain rare-earth dual use items in the context of Announcement 61 (see below) – applies to military users of any nationality. Screening of all downstream customers and end-users for potential military connections is now a critical compliance step for those controlled items.
• Extraterritorial Controls on Rare Earths Now Formalized: China has formalized its extraterritorial reach over rare-earth supply chains (MOFCOM Ann. 61/2025). Foreign companies must now seek a PRC export license for certain transfers of controlled rare-earth items that take place entirely outside of China.
• Likely Retroactive Application for Re-Exports: The new control on re-exporting PRC-origin rare-earth items applies in a staggered approach (see below). Based on prior practice, this control is likely to apply retroactively to items that were already exported from China before the respective effective date, creating a potential licensing requirement for existing overseas inventories.
• New 0.1% De Minimis Rule for PRC-Origin Rare Earths: A new, clear-cut threshold has been introduced. Foreign-made products (e.g., permanent magnets and their downstream products) containing 0.1% or more of certain specified PRC-origin rare-earth content by value will be subject to PRC export controls as of December 1, 2025.
• Comprehensive Coverage of Entire Value Chains: The new controls are not limited to finished products. They extend upstream to cover critical production and processing equipment, raw materials, and related technologies for rare earths (Ann. 56/2025), lithium batteries, and graphite anode materials (Ann. 58/2025), tightening China’s control over entire industrial ecosystems.
• Intensified Documentation and Compliance Burden: Companies must now meticulously track the origin and value of rare-earth content in their bills of materials (BOMs). This requires robust supplier declarations, detailed value calculations, and comprehensive end-use/end-user certifications to support license applications or justify license-free shipments.

Overview of the Announcements

• Ann. 55/2025: Imposes export controls on specified industrial-grade superhard materials, including specific grades of synthetic diamond powders, single crystals, diamond wire saws, grinding wheels, as well as related manufacturing equipment and technology.
• Ann. 56/2025: Establishes comprehensive controls over the rare-earth value chain, covering mining and processing equipment, key raw and auxiliary materials (e.g., specific extractants).
• Ann. 57/2025: Targets specific medium and heavy rare-earth elements and their related products, including Holmium (Ho), Erbium (Er), Thulium (Tm), Europium (Eu), and Ytterbium (Yb) in various forms like metals, alloys, and compounds.
• Ann. 58/2025: Places high-performance lithium-ion batteries, critical cathode and anode materials (LFP, ternary precursors, artificial graphite), and their related production equipment and technologies under export control. Accompanies Announcement 28/2025 which had already established far reaching technology export controls for the lithium-ion-battery supply chain under the Foreign Trade Law earlier this year.
• Ann. 61/2025: Introduces a formal extraterritorial or “re-export” control regime for specific rare-earth items. It captures: (1) foreign-made items with ≥0.1% PRC-origin further specified rare-earth content; (2) foreign-made items produced with PRC-origin rare-earth technology; and (3) the re-export of certain PRC-origin rare-earth items.
• Ann. 62/2025: Imposes export controls on a wide range of rare-earth-related technologies, including those for mining, refining, smelting, magnet manufacturing, and recycling. The definition of "export" is broad, covering IP licensing and joint R&D.

Announcements Explained in More Detail

A. Ann. 55, 56, 57 & 58/2025 — New Dual-Use Item Controls

These four announcements add new categories of materials and equipment to China's Dual-Use Item Export Control List.

1. What is controlled: The controls cover a range of strategically important materials and equipment. This includes specific grades of synthetic diamond (Ann. 55) used in semiconductors and precision manufacturing; a wide array of equipment for rare-earth mining, separation, and magnet manufacturing as well as rare-earth raw and auxiliary materials (Ann. 56); five specific medium-to-heavy rare-earth metals and their derivatives (Ann. 57); and high-performance lithium-ion batteries (gravimetric energy density ≥300 Wh/kg), specific LFP cathode materials (compaction density ≥2.5 g/cm³ and specific capacity ≥156 mAh/g), ternary precursors, artificial graphite anode materials, and their manufacturing equipment (Ann. 58).
2. Who is impacted: European and German manufacturers, importers, and distributors sourcing these materials or equipment from China will now be directly affected, as such transactions are subject to Chinese export licensing requirements. Downstream companies in automotive, semiconductor, renewable energy, electronics, and advanced machinery sectors will also be indirectly affected due to potential disruption in their supply chain.
3. Triggers and thresholds: The controls are triggered by specific technical parameters. For example, the lithium-ion battery control applies only to those with a gravimetric energy density of ≥300 Wh/kg or higher. Companies must classify their products against these detailed technical specifications.
4. Licensing and documentation pointers: For any export from China, operators must determine if their item is controlled. If it is, a license application to MOFCOM is required, supported by end-user and end-use statements and technical documentation. For items that are close to, but do not meet, the control thresholds, customs declarations must explicitly state "not a controlled item" and provide the specific parameters to avoid delays.
5. Effective Date: These four announcements formally take effect on 8 November 2025.

B. Ann. 61/2025 — Extraterritorial Controls on Overseas Rare-Earth Items

This is arguably the most consequential announcement, particularly for downstream participants in global supply chains, as it establishes a formal extraterritorial control framework for specified rare-earth materials and their derivatives.

The measure imposes a PRC licensing requirement on foreign entities for re-export transactions involving specified rare-earth items taking place outside China:

1. What items are controlled: 
   The controlled items, detailed in Annex I of the Announcement, are divided into two parts. They primarily cover the medium- and heavy-rare-earth items introduced into PRC Dual-use Item List under Announcement 18 (April 2025), and do not include the new items listed in Announcement 57.

   • Part I– Primary rare-earth materials and alloys, including samarium, dysprosium, gadolinium, terbium, lutetium, scandium, yttrium, and certain alloys and oxides.
   • Part II – Downstream products and derived materials:
     
     a. Rare-earth permanent magnet materials, including samarium–cobalt and terbium/dysprosium-containing NdFeB magnets, as well as parts, components, and assemblies incorporating these magnets.
     
     b. Rare-earth sputtering targets, containing the above elements or alloys.

   
   Notably, the control list goes beyond raw and processed materials (as under Announcement 18/2025) to explicitly include, for the first time, downstream parts, components, and assemblies incorporating specified rare-earth permanent magnets; while sputtering targets and other related items do not carry such an extension, reflecting the targeted strategic focus on specific supply chains. 

2. Three controlled categories of foreign transactions:
   
   a. Foreign-made items with PRC content: Specified products (as listed in Part II of Annex I) manufactured abroad that contain specified PRC-origin rare-earth materials (as listed in Part I of Annex I) where that content accounts for 0.1% or more of the item's total value. 

   The new 0.1% rule alters the existing compliance landscape for relevant foreign “end-users” and potentially further downstream actors in scenarios involving downstream processing.

   Prior to Announcement 61, under the PRC Export Control Law (ECL) and MOFCOM practice, end-users that imported and used controlled rare-earth raw materials or magnets to manufacture deeply processed downstream products (e.g., motors or sensors) were generally treated as “end-users” and only required to provide an End-User and End-Use Certificate. Subsequent transfers or re-exports of these further processed goods were, in principle, not subject to PRC re-export controls, except in special cases such as transfers to U.S. military end-users under the Announcement 46 (2024).
   
   Under Announcement 61, however, this principle may be fundamentally altered for permanent magnet–related items. Foreign companies that previously acted only as “end-users” or downstream customers may now require additional licensing for overseas manufacturing and re-export of relevant downstream products, depending on whether the value of PRC-origin rare-earth content meets or exceeds the 0.1% threshold — regardless of product complexity or level of integration.
   
   b. Foreign-made items using PRC technology: Items produced abroad by using controlled PRC technology related to rare earth extraction, smelting, or magnet manufacturing.
   
   c. Re-export of PRC-origin items: The simple re-export or transfer of controlled PRC-origin rare-earth items from one foreign country to another. This category generally seems to cover PRC-origin rare-earth products in their original form, without substantial transformation or processing, although the precise scope of application remains unclear. 

3. Re-Export vs. Domestic Transfer Abroad: An important question under Announcement 61 is whether the licensing obligation for foreign entities is limited to cross-border transfers (e.g., from Germany to France) or also extends to domestic transfers within the same foreign country (e.g., within Germany). As official guidance clarifying this point is not yet available, the exact scope remains an area of uncertainty. A prudent compliance approach might therefore suggest also scrutinizing domestic transfers to new recipients, particularly in sensitive supply chains or where the end use or end user is sensitive, such as military applications.
    
4. End-use/end-user red flags: License applications in the context of Announcement 61 will, in principle, be denied for transfers to all foreign military users (of any nationality) or to entities on ECL Blacklist oder Watchlist (and their ≥50% owned affiliates). Applications for end-uses related to advanced semiconductors (logic chips of 14 nanometers or below, or memory chips with 256 layers or more) or AI with potential military applications will be subject to a stringent case-by-case review.
    
5. What to do now:
   • Map Supply Chains: Immediately identify any products containing the listed rare-earth materials and determine their origin.
   • Conduct Value Calculations: For foreign-made items, calculate the value percentage of PRC-origin rare-earth content to assess if the 0.1% de minimis threshold is met.
      
   • Review Existing Inventory: Assess PRC-origin rare-earth items already held in inventory outside China, as their onward transfer may now require a license.
      
   • Implement Compliance Notices: Ensure that the mandatory "Declaration of Compliance" is passed down the supply chain for all relevant transactions.
      
6. Timeline and Implementation: Announcement 61 has a phased implementation timeline.
   1. The control on the re-export of PRC-origin items (Category 3) took effect immediately on 9 October 2025. To what extent downstream products of Chinese origin fall under Category 3 and would thus already be affected is currently unclear; however, the structure of the announcement and the interplay with the new de minimis rule in Category 1 seems to indicate that they would generally fall under the regime and timeline for Category 1). It remains to be seen how MOFCOM will position itself on this issue.
       
   2. The controls on foreign-manufactured items with PRC-origin rare-earth content (Category 1) and items produced abroad using PRC-origin technologies (Category 2) will take effect on 1 December 2025.
       
   3. Based on prior practice, retroactive application is likely for re-export transactions involving PRC-origin rare-earth items that were already overseas before the announcement was issued.

C. Ann. 62/2025 — Controls on Rare-Earth Technologies

This announcement strengthens controls over the technology underpinning China’s rare-earth dominance.

1. What is controlled: The control covers the export of technologies and technical data (drawings, process parameters, etc.) related to the entire rare-earth lifecycle: mining, separation, smelting, magnet manufacturing, and recycling.
    
2. Who is impacted: This affects European and German companies involved in joint ventures, R&D collaboration, technology licensing, or technical consulting with Chinese partners in the rare-earth sector. It also impacts the hiring of Chinese technical experts.
    
3. Broad Definition of "Export": The announcement clarifies that a technology "export" is not limited to physical transfer. It includes providing technology to foreign persons or entities through IP licensing, investment, joint research, consulting, or employment arrangements, whether inside or outside China.
    
4. Catch-all Provision: A license is required even for non-listed items or technologies if the exporter knows they will be used for or substantially contribute to overseas rare-earth production activities. This creates a significant due diligence burden.
    
5. What to do now:
   • Review R&D and JV Agreements: Scrutinize all forms of technical cooperation with Chinese entities to identify potential licensing requirements.
      
   • Assess Technology Transfers: Map all channels through which controlled technical information could be transferred, including employee training and cross-border data sharing.
      
6. Effective Date: This announcement took effect on the date of its issuance, 9 October 2025

GvW Shanghai can assist you with goods classification, licence strategy and cross-border compliance planning. Please contact us to discuss your specific product lines and transaction structures.

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