China retaliates against US, targets critical minerals, defense sectors with new trade restrictions

China in a tit-for-tat move has slapped sweeping export restrictions on dozens of US companies, including two critical minerals American firms, sparking fears of a trade clash between the global superpowers.

The move is seen as Beijing’s retaliation against Washington as last week the Pentagon blacklisted two dozen Chinese firms including Alibaba and Baidu. In response, China’s Commerce Ministry placed 10 US defense firms on a control list, preventing the export of Chinese-made products with potential military applications.

Similarly, China also targeted strategically important critical minerals sectors by slapping the export curbs on American rare earth producers MP Materials and USA Rare Earth.

This crackdown is seen as an attempt to leverage control over supply chains critical to advanced defense, electronics and renewable energy.

According to China’s Commerce Ministry that issued a statement to defend its restrictions, calling the measures a response to “the US government’s malicious practice”. Moreover, these measures are also designed to protect the national security and country’s interests.

"Organisations and individuals in any country or region are prohibited from transferring or supplying dual-use items originating in China to ​those entities," it said. As per statement, the export activities should be halted immediately.

At the same time on Monday, China’s Finance Ministry also excluded 46 US firms including Lockheed Martin, Boeing’s defense division and RTX from Beijing’s government procurement, aiming to maintain the dominance of domestic manufacturing.

As per experts’ analysis, these attempts are largely symbolic, failing to impact the US’ interests due to the limited presence of American firms in China.