Bangkok, Jul 18 (AP) China's state security agency says it is cracking down on alleged smuggling of rare earths minerals that it says threaten national security, just weeks after Beijing and Washington agreed to make it easier for American firms to obtain from China those materials, which are critical for manufacturing and computer chip production.

In a report published Friday in the state-run newspaper Global Times, the Ministry of State Security said foreign “espionage and intelligence agencies” were colluding to steal rare earths-related goods by repackaging and relabelling rare metals to hide their Chinese origin.

In some cases the minerals were falsely declared as non-controlled items, mislabelled as such things as “solder paste,” mixed into other materials like ceramic tiles, or hidden in plastic mannequins or bottled water, it said.

It referred only to an unnamed “certain country” that it said lacked the capacity to make and refine its own rare earths.

Investigations had found Chinese criminals were involved, exploiting shipping and delivery channels to evade controls on exports of the materials used in many high-tech applications including electric vehicle batteries, it said.

The crackdown followed a report by Reuters earlier this month detailing how rare earths were being transshipped to the US via Thailand and Mexico.

China is the main source for many strategically vital rare earths and it has moved to slow exports of such minerals in retaliation for steep import duties President Donald Trump has imposed on Chinese goods since he returned to the White House and launched his crusade to overturn a global trading system he says is unfair to the United States and its workers.

That followed an earlier series of restrictions by Beijing on exports of such materials as gallium, germanium, antimony and tungsten in response to trade friction with the administration of then-President Joe Biden.

In April, Beijing imposed permitting requirements on seven rare earth elements, under a Chinese law that applies to all exports, not just those bound for the US market.

With the permitting process taking 45 days, the new requirement caused a pause in shipments, threatening to disrupt production of cars, robots, wind turbines and other high-tech products in the US and around the world. The US, meanwhile, added to restrictions on exports of advanced technologies to China.

Rare earths have remained at the centre of China-US talks aimed at staving off huge tariff increases that were postponed in May to allow time for negotiations on a broader trade agreement. The deadline for reaching a deal is Aug 12.

An agreement announced in late June did not remove China's permitting requirement on rare earths, but Beijing agreed to flexibility in dialling up or down the approval process as needed.

Computer chips are another key bone of contention.

The Chinese Commerce Ministry said Friday that it had taken note of a decision by the Trump administration to lift restrictions on exports of key semiconductors used in artificial intelligence made by Nvidia and its rival Advanced Micro Devices.

In April, the Trump administration announced it would restrict sales of Nvidia's H20 chips to China — as well as MI308 chips from AMD.

But Commerce Ministry spokesman Wang Wentao said restoring healthy trade ties will require more action by Washington.

US export controls on Ascend chips made by Chinese tech giant Huawei Technologies have hurt the interests of Chinese companies, Wang told reporters in Beijing.

“We hope that the United States and China will meet each other halfway and correct their wrong practices through equal consultation, create a good environment for mutually beneficial cooperation between enterprises of both sides, and jointly maintain the stability of the global semiconductor production and supply chain,” he said. (AP) SCY SCY

Export controls on rare earths prompt a Chinese crackdown on illicit shipments while Beijing urges easing of US tech export restrictions. China announced enforcement against illicit exports of rare earth minerals, alleging foreign intelligence collusion and domestic criminal schemes to mislabel, repack, conceal or transship controlled materials. Authorities emphasise these measures as national security protections. China has imposed and enforced permitting requirements for certain rare earth exports under export law, slowing shipments, and links export management to trade negotiations with the United States while urging the US to lift or ease export controls on advanced technologies and semiconductors to stabilise supply chains.