BEIJING, October 20 (TMTPost)— China announced new export controls on graphite, targeting the key material used in the batteries for electric vehicles (EVs). 

Credit：Visual China

China will officially add three types of highly-sensitive graphite products that have both commercial and military applications to a list of export control from December 1, 2023, according to a joint statement issued by the Ministry of Commerce (MOFCOM) and the General Administration of Customs on Friday. Exporters shall apply for permits before they export the high-purity, high-hardness and high-intensity synthetic graphite material, and natural flake graphite and its products, and they will be subject to administrative punishment in case of exports without a license or outside the scope license under laws and regulations, the statement said, adding that exporters will face the criminal investigation if a crime is constituted. The government also will lift temporary export restrictions on five graphite products that have low sensitivity and are used in steel and chemical sectors, the statement said.

The export restriction on certain graphite products is common international practice, and China has notificed relevant countries and regions about the new move, a spokesperson of Chinese Commerce Ministry said later Friday. China, as the world’s largest graphite producer and exporter, has long been committed to non-proliferation and other international obligations, and imposed export controls over certain graphite products, either temporary or long-term, to meet needs for protection of national security and interests, the spokesperson said. The latest adjustment of export control does not target any specific country or region, and any export will be granted the license if it complies with related rules and regulations, according to the spokesperson.  

China’s new export curb came after the European Union (EU) officially launched an investigation into EVs from China at the beginning of this month, about three weeks after European Commission President Ursula von der Leyen announced EU’s executive body is going to take the action. Global markets “are now flooded with cheaper Chinese electric cars”, and their price is “kept artificially low by huge state subsidies”, which is distorting European market, von der Leyen said in her state of the union stress to the European parliament on September 13. Head of the executive arm said Europe is open for competition, not for a race to the bottom

The European Commission will decide whether to impose tariffs more than the current 10% standard rate for cars in the coming 13 months. The possible tariff will affect not just Chinese automakers but also foreign brands that produce vehicles there such as Tesla, Renault and BMW. The move may result in tariffs close to the 27.5% level already imposed by the U.S. on Chinese EVs, Bloomberg cited people familiar with the matter following von der Leyen’s announcement.

China felt very dissatisfied with EU’s investigation as it is based on subjective assumption, lacks adequate evidence, and doesn’t adhere to World Trade Organization rules, a spokesperson of the Ministry of Commerce commented right after EU’s opening investigation. In the high-level dialogue with EU representatives late September, China has called the subsidy probe “naked protectionist behavior” under the cover of “fair trade”, and cautioned such attempt will severely disrupt and distort the global automotive industrial and supply chain, of which EU has a part, and impose negative impact on China and EU’s economic and trade relationship, the spokesperson said. The person said Beijing will keep a close eye on EU’s following investigative procedures and firmly protect rights and interests of Chinese firms.

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