Western companies raise alarm over China’s demand for sensitive data in rare earths trade

Western companies raise alarm over China’s demand for sensitive data in rare earths trade

Western companies are voicing growing concern that China is demanding sensitive business information as a condition for securing exports of rare earth metals and magnets, raising fears of data misuse and exposure of trade secrets, the Financial Times reported.

Beijing’s commerce ministry has been asking companies to provide extensive production details, customer lists, and even images of manufacturing facilities as part of the approval process for rare earth and magnet shipments, according to multiple firms and official guidelines.

China dominates the global processing of rare earths and magnet production. These components are critical to electronics, electric vehicle motors, wind turbines and defence applications, including fighter jets — giving Beijing considerable leverage in ongoing trade tensions.

Sensitive data requests

Frank Eckard, chief executive of German magnet maker Magnosphere, said Chinese authorities were explicitly seeking “confidential information” from companies to obtain export approvals. “It’s a matter of [China] getting information officially rather than trying to steal it,” he said.

In early April, China introduced tighter controls on seven rare earth metals and related magnet materials, a move widely seen as retaliation in the escalating US-China trade dispute. Companies worldwide scrambled to secure supplies.

Although the US and China this week reached a framework deal under which President Donald Trump said Beijing would ease rare earth export restrictions, China has not said it would lift its controls entirely. It remains unclear whether the deal will affect China’s export approval process.

Current Chinese regulations require companies to submit broad-ranging data on their operations, workforce, product applications and production processes. Guidelines from the commerce ministry also call for images of products and facilities, and details of past business relationships.

“We had to provide a lot of things — photos, videos of our production line, market information, and customer names with some redacted — or else they wouldn’t process the paperwork,” said Andrea Pratesi, supply chain director at Italy’s B&C Speakers. “We produce loudspeakers. We have nothing to hide.”

Beyond published guidelines

Experts say the demands often exceed the official guidelines. A Chinese export control lawyer, who requested anonymity, said authorities frequently request details on customers’ production and operational processes.

Matthew Swallow, a product manager at UK-based Magnet Applications, said his company’s applications had been initially rejected in April for “lack of end-user evidence.” They have since started providing photographs, ultimate application details, and customer information to obtain approvals.

Swallow said there was “certainly concern” about revealing such data, and he now advises clients not to include proprietary information in submissions.

Applications are typically filed by Chinese suppliers with local commerce bureaus on behalf of their foreign clients, raising additional worries about trade secrets being exposed during this process.

Pressure vs. long-term risks

Jens Eskelund, chair of the EU Chamber of Commerce in China, said the level of detail required in some applications makes it challenging for companies in sensitive industries to comply without risking intellectual property concerns.

“For some applications, you need to stipulate the uses to such detail that it creates an IP concern,” Eskelund said.

Yet despite these worries, many companies are prioritising access to rare earth magnets over longer-term risks. “Companies are willing to do whatever China wants to get the supplies,” said a European executive, speaking anonymously.