Western manufacturers seeking to reduce their dependence on China face supply-chain exposure beyond the location of final assembly. The International Energy Agency has documented concentrated Chinese production of rare-earth and battery inputs, including materials used by producers outside China.
Dependencies in minerals and battery materials
The IEA estimated that China accounted for around 60% of global mining output and 91% of separation and refining in 2024 for four rare earths used in magnets: neodymium, praseodymium, dysprosium and terbium. Those figures cover magnet rare earths, rather than all rare-earth elements.
In its October 23, 2025 analysis, the agency also identified dependencies in battery production outside China. It said South Korea continued to rely on Chinese precursor cathode materials and other upstream inputs. Expanding battery-cell production therefore does not necessarily establish an independent supply of the materials used to make those cells.
China introduced export controls on seven rare-earth elements and related products on April 4, 2025. The IEA said shortages of permanent magnets subsequently forced some carmakers in the United States, Europe and elsewhere to reduce production or temporarily shut factories.
Further controls announced on October 9, 2025 covered rare-earth products, equipment and technology, alongside battery-related items. On November 7, China’s Ministry of Commerce and General Administration of Customs issued a notice suspending six announcements until November 10, 2026. The suspension included the October measures on lithium batteries and related materials, overseas rare-earth items and rare-earth technology.
The Manus acquisition decision
China’s foreign investment security review office at the National Development and Reform Commission said on April 27, 2026 that it had prohibited the foreign acquisition of Manus and required the parties to unwind the transaction.
In its announcement about joining Meta, Manus described its work on general-purpose AI agents and said it would continue operating from Singapore and maintaining its subscription service. These were company statements about its plans.
The Chinese office’s brief public decision did not name the buyer, provide detailed reasons or describe how the acquisition would be unwound. It did not establish that unwinding had been completed.
Chinese counter-sanctions regulations
Separately, implementing regulations for China’s Anti-Foreign Sanctions Law took effect on March 23, 2025, following their adoption by the State Council on March 21.
The regulations authorize countermeasures including restrictions on China-related imports and exports, investment in China, and the provision of data and personal information. Their application depends on decisions by the relevant Chinese authorities.
Article 17 authorizes authorities to summon organizations or individuals for discussions, order corrections and take other measures for implementing or assisting foreign restrictions classified as discriminatory against Chinese citizens or organizations.
Article 18 allows Chinese citizens and organizations to seek court orders to stop such conduct and obtain compensation when it infringes their lawful rights and interests. These provisions concern participation in specified foreign restrictions; they do not establish that moving production out of China automatically triggers countermeasures.
Europe’s proposal and manufacturers’ commercial ties
The European Commission proposed the Industrial Accelerator Act on March 4, 2026. It would introduce European-content requirements, low-carbon requirements or both for selected public procurement and public support schemes. The Commission identified sectors including steel, cement, aluminium, cars and net-zero technologies.
The Commission said the proposal was intended to increase demand for European-made, low-carbon products and strengthen production capacity. Its announcement specified negotiation by the European Parliament and the Council before adoption and entry into force.
European manufacturers also maintain production and development operations serving Chinese customers. In March 2025, BMW said China accounted for more than a quarter of its sales and that its BMW Brilliance Automotive joint venture produced vehicles almost exclusively for that market.
Volkswagen described its Hefei site as a production, development and procurement centre in a 2024 announcement. Mercedes-Benz said in its February 12, 2026 results announcement that its China plan expanded local research partnerships and increased localization across the supply chain.
