Over the last year or so, in response to heightened geopolitical frictions and unpredictable supply chain restrictions, China has announced harshly tightened regulations for its overseas investments, technology transfer, personnel movements, and exports of critical minerals and products. The string of new decrees aims at national security and expands state control over its strategic resources as also over the external engagement of China-based firms.

For India, this further complicates its economic engagement with its northern neighbour, an engagement already troubled by border-related issues, severe trade imbalances, and deep import dependence, among others. 

China’s Decrees
In 2023-2025, China imposed export controls and licensing requirement on certain critical minerals and rare earth elements. The controls also covered overseas entities in China as well as products made outside the country using Chinese materials or technologies and sold to third countries. The onerous requirements, affecting a range of strategic and dual-use goods, were suspended till November 2026 under the October 2025 agreement between China and the US in Busan, and for another 2 months following the September 2026 meeting between the two presidents.

China’s regulatory changes intensified via State Council Decree 834 on “Provisions on the Security of Industrial and Supply Chains,” effective from March 2026. Decree 835 “Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States” was implemented from April 2026, while decree 837 on “Regulation on Overseas Investment” came into force in July. State Council Order 839 codifies its critical minerals dominance across the entire mineral value chain, starting June. Number 841 covers regulations on exit and entry of technical persons beginning from October.

In effect, China is leveraging its carefully built economic strengths for institutionalising its global dominance of industry, technology and supply chains, while attempting to negate efforts by other countries to counter this status. Under the guise of national security, it now exerts state control over emerging sectors and technologies to strengthen its global industrial power.

Overseas Investment
While all the decrees hold strategic significance for geopolitics and global industry, the curbs on overseas investment and critical minerals are particularly far-reaching.

China has emerged as a top three global investor. The Regulation on Overseas Investment incorporates national security and data issues, and increases compliances for Chinese firms going abroad.

The decree broadens the definition of outward investments to include not just Chinese companies, but also foreign companies registered in China. It opens the gate for ‘full-process supervision’ which could mean corporate governance compliances during the entire life of the investment, from pre-entry approvals to potentially having a say in repatriations and exits.

Under this law, Chinese investors are barred from exporting goods banned or controlled by the government, and this provision also restricts technology transfers, data flows, and technical training.

The new provisions accord powers to the Chinese government to retaliate when faced with barriers imposed by other countries. Taken in conjunction with Decree 835, this enables the country to respond with punitive measures to perceived unlawful acts such as sanctions.

Critical Minerals
The provision on critical minerals has immense implications for the rest of the world, dependent on semiconductors, AI, advanced manufacturing and clean energy inputs that originate in China. China processes more than half of the world’s lithium, two-thirds of cobalt and almost all graphite and rare earths. From discovery to first production takes at least 15 years, making catch-up difficult. 

The International Energy Agency estimates that export controls by China on these minerals could place at risk about $6.5 trillion of downstream production. Sectors such as semiconductors, data centres, telecom, electronics, medical devices, solar panels and many more could be affected.

The new requirements include state controls for the full critical mineral value chain including exploration, mining, processing, manufacturing, stockpiling and recycling. This would cover strategic reserves and stockpiling by other countries of even recycled minerals from products originating from China. Any actions by other countries such as technology controls, sanctions or investment restrictions could invite a legal response from Beijing.    

Challenges for India
China and major economies are locked in strategic competition, trading off manufacturing monopolies against large markets required to sustain China’s export over-capacity. India finds itself in a more complex geoeconomic situation, easing Press Note 3 restrictions on Chinese investments, only to find China imposing controls on overseas investments and technology transfers.

Instances such as Beijing’s denial of cell technology to make lithium-ion cells in India exemplify the challenges for New Delhi. Such policies can make industries such as solar panels, electric vehicles, electronics and permanent magnets hostage to Chinese regulatory discretion.

While India may own reserves of some rare earths and critical minerals, exploration, extraction and processing technologies are absent, leading to continued dependence on China. In fact, any Chinese investments permitted in India under Press Note 2 of 2026 for key sectors such as electronic capital goods, polysilicon and ingot manufacturing, may run into Chinese export controls or face Chinese government oversight. Even sourcing via third countries could become a problem owing to the new Chinese laws.

India is not alone in confronting the renewed strategic challenge emanating from China’s rising weaponisation of its critical minerals and technology dominance. However, India’s growth trajectory is increasingly entangled with Beijing’s willingness to license, transfer or withhold critical inputs. Managing this reality will require sustained external agility, including strategic partnerships with resource-rich countries, faster buildout of domestic capabilities in processing and manufacturing, and developing diversified growth and technology pathways.