U.S., China Ease Rare Earth and Chip Export Controls Amid Pursuit of Self-Sufficiency (AI Translation)

【周刊提前读】中美放松稀土与芯片出口 各自建设自给能力

Summary:

Since the U.S. first restricted Nvidia’s AI chip exports to China in September 2022, Nvidia’s CEO Jensen Huang had remained low-profile regarding the Chinese market, only re-emerging publicly in June 2025 amid breakthroughs in U.S.-China trade negotiations. On June 9-10, 2025, U.S. and Chinese delegations held their first economic and trade dialogue in London, resulting in the “London Framework.” By June 27, China’s Ministry of Commerce confirmed, “China will accelerate rare earth exports to the U.S., and the U.S. will accordingly lift certain restrictions.”[para. 1] Subsequently, on July 15, Nvidia announced that U.S. authorities approved renewed AI chip H20 exports to China, which was confirmed by U.S. Commerce Secretary Howard Lutnick as part of the rare earth negotiations with Beijing. Huang visited Beijing, attended the China International Supply Chain Expo in traditional Chinese dress, praised China’s open-source AI progress, and openly commended Huawei’s achievements, emphasizing no one should underestimate Chinese manufacturing and innovation capability.[para. 2][para. 3]

Rare earth export controls were indeed relaxed: In June, China’s rare earth magnetic material exports surged to 3,187.7 tons—the highest since controls were imposed—with U.S.-bound exports growing sixfold to 352.8 tons.[para. 4] Tensions escalated earlier in 2025 when President Trump imposed up to 145% tariffs on Chinese goods, to which China responded with 125% tariffs; both later agreed to mutual tariff reductions, retaining only a 10% reciprocal tariff and establishing a bilateral trade consultation mechanism.[para. 5][para. 6]

The “tariff war” previously revolved around the U.S. restricting AI chips and EDA (Electronic Design Automation) software, while China countered with rare earth controls.[para. 7] Following recent negotiations, the U.S. resumed AI chip H20 and EDA software exports to China, while China also reopened its A-share market to semiconductor IPOs, supporting domestic chip design and manufacturing. The U.S., meanwhile, pursued “minerals-for-access” in its diplomacy, pursuing rare earth development partnerships globally, and in July concluded rare earth supply agreements with Japan, the Philippines, Indonesia, and previously with Vietnam.[para. 8]

On the technology front, Nvidia’s H20 chip is a China-specific, previous-generation product with restrictions, yet still more powerful than most domestic Chinese AI chips, aided by its software ecosystem. Demand from Chinese internet giants like Alibaba, Baidu, and Tencent shifted partially to domestic chips following the H20 export freeze in April—yet the capacity and supply constraints persist for homegrown chips, making Nvidia’s products still relevant in the short term.[para. 12][para. 13][para. 14] Chinese giants are scaling their innovations: Huawei’s Ascend chips, Baidu’s Kunlun P800 AI processors, and firms like Moore Threads and Muxi are rapidly advancing their technologies and market share.[para. 15][para. 16]

The reciprocal easing of controls remains selective: While the H20 chip was allowed, it is a downgraded version, and advanced EDA software still remains a strategic variable for China’s tech development.[para. 11][para. 16] China, while relaxing rare earth exports, introduced new curbs on advanced lithium battery technology, aiming to preserve its edge in next-generation battery innovation.[para. 19]

For the U.S., rare earth self-sufficiency remains a strategic priority. In July, the Department of Defense invested $400 million in MP Materials—the U.S.’s only significant rare earth miner—securing a 15% stake and a decade-long offtake contract with a minimum $110/kg price, well above recent market averages.[para. 33][para. 34][para. 35] Apple also signed a $500 million agreement to source U.S.-made rare earth magnets from 2027. However, U.S. supply chain ambitions face hurdles, especially in heavy rare earths, given China’s dominance in mining, refining, and manufacturing, where China accounts for about 90% of the world’s separation, refining, and magnet manufacturing capacity.[para. 37][para. 39][para. 41]

Ultimately, while recent trade negotiations have opened critical technology and resources, industry consensus expects the current détente to be temporary. Both sides continue to invest heavily in securing technological sovereignty and supply chain resilience, signaling ongoing strategic rivalry in rare earths, semiconductors, and advanced manufacturing.[para. 47][para. 48][para. 50]