Foreign agents targeting China’s rare earths sector, spy agency claims

A warning to domestic industry players: share nothing

Earlier this month, China’s spy agency, the Ministry of State Security, claimed that foreign institutions were targeting the country’s rare earth and food industry to steal patented technology and state secrets.

The allegations were publicized by state broadcaster CCTV during its Sunday programing, highlighting two different cases where accused individuals each received 11-year sentences for sharing rare earth information with “overseas forces”, including a Shanghai-based subsidiary of a foreign company.

Foreign investors allege that China’s espionage law, which was revised last year, has criminalized business activities that were previously legal, with cross-border data transfers becoming a notable concern.

Adamas take: In December 2023, technology to produce rare earth magnets were added to China’s “Catalogue of Technologies Prohibited and Restricted from Export”.

In our view, the spy agency aims to use the latest reported cases as a reminder to its industry players that it is watching and a warning not to take the latest export ban lightly.

The importance of developing processing and magnet manufacturing capabilities independent of China cannot be understated as the nation aggressively cracks down on technology exports.

[The insight above is an extract from the April update of the EV Motor Materials Monthly service.]