China likes to condemn the United States for extending its arm too far outside of its borders to make demands on non-American companies. But when it sought to hit back at the U.S. interests this month, Beijing did exactly the same.
In expanding export rules on rare earths, Beijing for the first time announced it will require foreign firms to obtain approval from the Chinese government to export magnets containing even tiny amounts of China-originated rare earth materials or produced with Chinese technology.
That means a South Korean smartphone maker must ask for Beijing’s permission to sell the devices to Australia if the phones contain China-originated rare earth materials, said Jamieson Greer, the U.S. trade representative. “This rule gives China control over basically the entire global economy in the technology supply chain,” he said.
For anyone familiar with U.S. trade practice, China is simply borrowing a decades-long U.S. policy: the foreign direct product rule. It extends the reach of U.S. law to foreign-made products, and it has been used regularly to restrict China’s access to certain U.S. technologies made outside of the United States, even when they are in the hands of foreign companies.
It is the latest example of Beijing turning to U.S. precedents for tools it needs to stare down Washington in what appears to be an extended trade war between the world’s two largest economies.
