China Tightens Control Over Technology, Minerals, and Engineers Amid Escalating Trade War

As trade tensions with the United States and Europe intensify, China has moved to tighten its grip on critical technologies, minerals, and highly skilled engineers, aiming to retain strategic industrial expertise within its borders.

Beijing’s latest measures include new export restrictions on key battery technologies, stricter controls over the transfer of critical mineral processing methods, and increased scrutiny on the movement of engineers and industrial equipment. These policies, unveiled through ministry notices and industry sources, underscore China’s efforts to shield its cutting-edge technological advancements from global competitors.

The escalation comes at a time when US President Donald Trump has imposed additional tariffs on Chinese exports, and the European Union has raised trade concerns over the Chinese electric vehicle (EV) sector. This protectionist shift has already begun disrupting global supply chains, affecting major multinational corporations and their expansion plans outside China.

Restricting Outflow of Engineers and Industrial Equipment

China has intensified its efforts to control the movement of skilled engineers and high-value manufacturing equipment, making it increasingly challenging for foreign firms to relocate production outside the country.

Impact on Apple and Foxconn’s India Expansion

One of the most prominent examples of China’s tightening grip is the deliberate slowdown in equipment transfers to India by Apple’s primary contract manufacturer, Foxconn.

• Foxconn, a Taiwan-based company, has been spearheading Apple’s diversification strategy, shifting production to India.
• However, Chinese authorities have reportedly made it difficult for Foxconn to send key machinery and technical personnel to its Indian plants, delaying Apple’s supply chain expansion efforts.
• Similar challenges have been reported by other Taiwanese electronics companies, whose managers claim that shipments of certain high-tech manufacturing equipment to India face customs hurdles.

While logistical flows to Southeast Asia remain unaffected, India’s emergence as a major electronics manufacturing hub appears to be a growing concern for Beijing, prompting deliberate delays in customs clearances for essential components and machinery.

China’s Soft Power Tactics to Deter Industry Migration

Beyond formal regulations, China has allegedly exerted influence over key suppliers and industrial players, discouraging them from establishing manufacturing and assembly operations in India.

An Indian government official, speaking on condition of anonymity, accused Beijing of using customs delays as a trade barrier to prevent high-tech manufacturing from moving south. China’s state-backed influence over electronic component suppliers could further complicate India’s ambition to position itself as a global manufacturing alternative to China.

New Export Controls on Battery Technologies and Critical Minerals

China’s dominance in the global battery supply chain and critical mineral refining industry gives it significant leverage in international trade negotiations. Beijing is now proposing new export controls to safeguard its strategic advantage, particularly in battery production technologies and rare earth processing.

Battery Technology Protectionism

• China is the world’s largest producer of lithium-ion batteries, supplying major automakers and clean energy firms.
• New export control proposals aim to prevent Chinese-developed battery technologies from being transferred overseas, effectively limiting foreign competitors from gaining access to cutting-edge advancements.

Restricting Critical Mineral Processing Methods

• China processes over 60% of the world’s rare earth minerals, which are essential for electronics, defense systems, and renewable energy technologies.
• Recent ministry directives suggest stricter regulations on the export of mineral processing technologies, ensuring that China retains its dominant role in global supply chains.

These measures could disrupt the availability of key components for industries reliant on Chinese rare earths, impacting global electric vehicle production, semiconductor manufacturing, and defense applications.

Geopolitical and Trade War Implications

1. Impact on US and European Trade Relations

With the Biden administration and European Union increasing scrutiny on China’s industrial policies, Beijing’s latest trade restrictions may trigger retaliatory actions from Western governments.

• US Tariffs & Trade Policy: Donald Trump’s protectionist trade stance has already resulted in higher tariffs on Chinese exports, forcing China to explore new defensive measures in response.
• EU-China Trade Dispute Over EVs: The European Union has raised concerns over China’s subsidies for its domestic electric vehicle industry, further escalating trade hostilities.

These developments suggest that the global trade environment is set to become even more fragmented, with increasing localization of supply chains as companies seek to reduce dependence on Chinese technology and resources.

2. The India Factor: A Rising Alternative?

India has been actively positioning itself as a viable alternative manufacturing hub, attracting major global investments in semiconductors, electronics, and electric vehicles.

• The Indian government’s production-linked incentive (PLI) schemes are designed to entice global companies to shift production from China to India.
• Firms like Apple, Samsung, and Tesla have expanded their footprint in India, signaling confidence in its long-term potential as a tech manufacturing center.

However, China’s ability to control crucial supply chains remains a key obstacle to India’s ambition to fully replace China as a global manufacturing leader.