China is making it harder for key technologies and skilled workers to leave the country, aiming to keep its competitive edge as trade tensions with the U.S. and Europe grow. According to the Financial Times, Beijing has introduced new restrictions on the export of critical technologies, including battery production and mineral processing. This move is a response to increasing pressure from Western governments, who have imposed tariffs and trade barriers against Chinese industries.
Blocking Tech Transfers and Skilled Workers
Over the past few months, Chinese authorities have tightened restrictions on engineers and high-tech equipment leaving the country. Companies like Foxconn, Apple’s biggest manufacturing partner, are facing difficulties transferring machinery and key personnel to India, where Apple hopes to expand production. Some Indian officials claim China is intentionally slowing down customs processes to make it harder for electronics manufacturers to set up operations in the country.
This approach mirrors the West’s efforts to block China’s access to advanced semiconductors and artificial intelligence technologies. Despite Beijing’s criticism of these restrictions, it is now using similar tactics to maintain control over its own technological advantages.
Protecting Battery and Mineral Technology
China has also proposed strict new controls on the export of battery technologies, particularly those related to lithium extraction and advanced battery materials. This is a strategic move, as China dominates the global battery supply chain, producing 99% of all LFP (lithium iron phosphate) cathode materials. The new rules could force Chinese battery giants like CATL to keep key production processes within China, preventing foreign competitors from fully replicating their technology.
These restrictions will likely have a major impact on South Korean and Japanese battery companies, which have relied on Chinese suppliers to improve their own products. Some industry analysts believe the new controls could slow down the West’s efforts to develop alternative battery supply chains.
Expanding Restrictions on Critical Minerals
China has been gradually expanding its control over rare earth minerals and other strategic materials. In December 2023, Beijing tightened restrictions not just on the export of rare earth elements but also on the processing technologies required to refine them. This is particularly significant because China produces around 95% of the world’s permanent magnets, which are essential for electric vehicles, wind turbines, and high-tech electronics.
By restricting access to processing technologies, China is making it harder for other countries to develop alternative supply chains. This could delay efforts by the U.S. and its allies to reduce their dependence on Chinese materials.
A Strategic Move With Global Consequences
China’s latest trade policies show a clear shift in strategy. Instead of just responding to Western restrictions, Beijing is actively taking steps to secure its dominance in critical industries. These moves will likely push companies and governments to speed up efforts to diversify their supply chains. However, given China’s technological lead in areas like batteries and rare earth processing, cutting dependence on Chinese suppliers won’t be easy.
As global trade tensions continue to rise, businesses must prepare for a more fragmented supply chain where access to key technologies is increasingly restricted. Whether this benefits China in the long run remains to be seen, but for now, Beijing is making it clear that it will not give up its technological advantage without a fight.
