Beijing is tightening its grip on cutting-edge Chinese technology, aiming to keep critical knowhow within its borders as trade tensions with the US and Europe escalate. Chinese authorities in recent months have made it more difficult for some engineers and equipment to leave the country, proposed new export controls to retain key battery technologies, and moved to restrict technologies for processing critical minerals, according to multiple industry figures and ministry notices.
The country’s safeguarding of leading technologies comes amid added tariffs from US President Donald Trump and a trade row with Europe over cars, which threaten to spur more local and foreign groups to move production elsewhere. Among the companies to be hit is Apple’s main manufacturing partner Foxconn, which has been leading the Silicon Valley group’s supply chain diversification into India.
People familiar with the matter said Chinese officials had made it difficult for the Taiwanese-owned contract manufacturer to send machinery and technical Chinese managers to India, where Apple is keen to build up its supply chain. A manager at another Taiwanese electronics company said that they too were facing challenges sending some equipment out of China to plants in India, though he noted shipments to south-east Asia remained normal. An Indian official alleged China was using customs delays to impede the flow of components and equipment heading south. “Electronic industry supply players have been told not to establish manufacturing and assembly operations in India,” the official said, asking not to be named. Media site Rest of World earlier reported on some of Foxconn’s issues.
Analysts say Beijing’s emerging playbook resembles the western tech transfer restrictions it has loudly criticised as unfair. The informal controls appear in particular to target China’s geopolitical rival India, with some Chinese groups saying that projects in south-east Asia and the Middle East remain unaffected. But Beijing is also increasingly rolling out formal export restrictions on key technologies that apply worldwide.
“A strong supply chain and skilled workforce are some of the few advantages China still has these days,” said an investor in one company facing issues moving some technical engineers abroad. “You don’t want to lose that to other countries.” China’s commerce ministry last month proposed restrictions on the export of technologies related to lithium extraction and making advanced battery materials, both areas where the country has a leading position. “China is building up a large export control muscle and being quite deliberate in what they choose to control,” said Antonia Hmaidi, a senior analyst at the Mercator Institute for China Studies. “Fundamentally it’s about keeping China central to global supply chains,” she said.
Hmaidi said Beijing was often targeting areas near the top of the supply chain where Chinese groups controlled materials and technological processes, while leaving end products uncontrolled. Cory Combs at consultancy Trivium China said that the interventions Beijing had put forward in the battery supply chain represented “a new class of export controls”.