China suddenly announced an expansion of controls on the export of rare earths and related technologies, a move seen by analysts as a significant escalation of China’s rare earth export control. The Chinese government is using rare earths as a bargaining chip, prompting the United States and its allies to step up cooperation in order to counterbalance it and reshape the global rare earth industry landscape.
The Chinese Ministry of Commerce announced on Thursday (9th October) that official approval is required for the export of technologies related to the mining, refining of rare earth minerals, and the process of manufacturing magnetic materials. Without authorization, exporting or collaborating with overseas companies for development is prohibited, with the restrictions expanding from raw materials to intellectual property rights and technology.
According to the announcement, applications for the export of rare earths used in the production of semiconductors below 14 nanometers, advanced storage chips, semiconductor manufacturing or testing equipment, or artificial intelligence with potential military applications will be reviewed on a case-by-case basis.
The announcement also stated that companies with ties to foreign military forces or listed on export control or observation lists will be denied permits. Applications for rare earth minerals that could be used for weapons, terrorism, or other military purposes will also be rejected. The new regulations concerning the export of rare earth materials will take effect on December 1st, with new regulations on technology and labor taking immediate effect.
These control measures expand on the actions taken by the Chinese government earlier this year, which required permits for the export of certain rare earth metals and related products. Companies in the United States and around the world, particularly in the automotive, electronics, and defense sectors, have long struggled to secure rare earth supplies, with China leveraging its control of rare earths during trade negotiations with the U.S.
For decades, China has been establishing its dominance in global rare earth mining and processing. China produces approximately 90% of the world’s rare earths and controls a large portion of the supply of many other crucial minerals. U.S. military suppliers rely on Chinese materials to manufacture products such as drones and missile targeting systems.
The new regulations indicate that while the U.S. and other Western countries seek to establish their own industries and reduce dependence on China, the Chinese government is extending its control further downstream in the rare earth supply chain.
Wang Dan, China Director of Eurasia Group, stated that Beijing’s latest move signifies a “significant escalation in rare earth export controls.”
Political commentator Li Lin told the Epoch Times that some of China’s export control measures aim to limit Western military equipment but may end up causing greater harm to itself, with the efficacy of such measures still being observed.
He mentioned the newly listed synthetic diamonds as an example. Chinese companies were heavily reliant on mass-produced cheap synthetic diamonds, which created a significant impact on the global diamond market and brought in considerable profits. Should the export of synthetic diamonds be restricted, Chinese enterprises would be the ones negatively affected, which could also damage the economy. The situation with lithium batteries is similar.
Wang He, a China expert, told the Epoch Times that in the strategic game between China and the U.S., rare earths and other key materials are among China’s few trump cards. While previous plays by China in this regard have yielded some results, the increased export control on rare earths by China this time may not be temporary but rather a long-term strategy.
Wang believes that the world is closely monitoring whether China will launch a war against Taiwan in 2027, with the U.S. and the West actively planning and preparing to face such a scenario. The escalation of rare earth export control by China can be seen as a warning and a threat to the U.S.
As the latest restrictions are put in place, President Trump and President Xi are planning to meet at the end of this month in South Korea for a regional leadership summit. Tim Zhang, founder of Edge Research Pte Ltd in Singapore, pointed out that from a geopolitical perspective, China’s new export controls are aimed at enhancing influence before the upcoming Trump-Xi summit.
In response to China repeatedly using rare earth export restrictions, U.S. Interior Secretary Doug Burgum stated in an interview with Jan Jekielek of “American Thought Leaders” on October 7 that “we must retaliate in kind.” China’s export restrictions “should be a wake-up call for everyone in the West, reminding us that we need to establish secure supply chains as soon as possible,” which has become an urgent priority.
Burgum noted that China may have overestimated its advantages, thereby highlighting its own weaknesses. He expressed that “in my view, China has revealed its hand prematurely. Although we are not engaged in any substantive warfare, we are essentially in a state of cold war, a trade war.” “By showing their cards early, they have awakened America and undoubtedly the current administration.”
China has repeatedly used rare earths as leverage to pressure the West, prompting the U.S. and its Asia-Pacific allies to counter China’s control over rare earths even before this latest upgrade of restrictions.
In the face of China’s monopoly on rare earths, the U.S. government is directly stepping in and collaborating with the capital market to cultivate the domestic rare earth industry.
In mid-July, the U.S. Department of Defense reached a “transformative” public-private partnership agreement with the U.S. rare earth mining company MP Materials: the Pentagon invested $400 million to subscribe to preferred shares issued by MP, acquiring approximately 15% equity and becoming its largest shareholder.
This move signifies unprecedented direct government investment in a rare earth enterprise to ensure the security of critical mineral supplies. MP Materials is the only operational rare earth mine in the U.S., owning the Mountain Pass rare earth mine in California, which historically was a major source of global rare earths.
U.S. officials acknowledged that the investment in MP was a unique response to “market failures caused by China’s control of supply chains,” supporting an American company to gain a foothold in a market dominated by China.
According to a report by Bloomberg on August 26, President Trump stated that the U.S. has more tools in trade compared to China, with aircraft and components being strong weapons against Beijing’s rare earth restrictions. He revealed that due to China’s restrictions on rare earth magnets, the U.S. temporarily halted the supply of Boeing components to China, resulting in about 200 aircraft being grounded. “Later, I sent all the parts over, so their planes could continue to fly.”
Wang He stated that the U.S. and the West are working to establish a rare earth supply chain independent of China, while China is attempting to disrupt these efforts. Therefore, China has expanded its control in export restrictions by adding “long-arm jurisdiction” measures and extending control from raw materials to technology and intellectual property similar to the U.S. “product rules.”
However, since the beginning of this year, the U.S., along with its allies, has been resisting China’s restrictions. In early July, the U.S. and its Asia-Pacific allies swiftly moved on key mineral sector cooperation.
On July 1, the U.S.-Japan-India-Australia Quadrilateral Security Dialogue (Quad) mechanism held a foreign ministers’ meeting in Washington, where the four countries jointly announced the start of the Quad Critical Minerals Initiative to diversify supply risks and weaken China’s monopoly in crucial mineral sectors.
The four nations aim to counter China’s control over the rare earth and other critical mineral supply chains with this initiative.
Furthermore, the U.S. government and its allies are extensively diversifying projects in the rare earth industry chain: for example, the Pentagon previously provided funding to the Australian rare earth company Lynas to build a rare earth separation facility in Texas; the Japanese government invested in Lynas through an official-private fund to ensure stable supply; India is also looking to develop its domestic rare earth resources. Within the U.S., thanks to policy support, an increasing number of enterprises and investors are entering the fields of rare earth smelting, alloys, and magnetic material manufacturing.
A series of capital operations is reshaping the global rare earth industry landscape, with the U.S. and its partners hoping to significantly increase the proportion of “de-Sinicization” in the rare earth supply chain in the coming years. With funding and policy support, the market competitiveness of U.S. domestic rare earth enterprises has greatly increased, posing a potential challenge to China’s rare earth supply chain.