China Tightens Rare Earth Export Controls, Raising Stakes in Trade Talks with the U.S.
China has imposed tougher export restrictions on rare earth elements and other materials vital to global high-tech manufacturing, escalating tensions amid ongoing trade negotiations with the United States.
Beijing, which processes about 90% of the world’s rare earth supply, announced the new rules on Thursday — a strategic move that comes ahead of a potential meeting between Chinese President Xi Jinping and U.S. President Donald Trump later this month. These materials are indispensable for producing everything from smartphones and solar panels to electric vehicles and advanced defense systems, making them a powerful bargaining chip for China.
New Export Rules Formalized
China’s Ministry of Commerce confirmed that foreign companies must now obtain government approval to export any products containing rare earths — even if they contain only trace amounts. Exporters are also required to specify the intended end-use of these materials before shipping them abroad.
This formalizes previous restrictions that limited foreign collaboration and unauthorized processing technology exports. The new rules also extend to lithium batteries and certain forms of graphite, both critical materials in electric vehicles and renewable energy storage systems — industries in which China already dominates production.
Beijing stated that the updated regulations are designed to “safeguard national security.” However, analysts say the move is aimed squarely at foreign defense manufacturers, including those in the United States, that rely heavily on Chinese rare earths for advanced weaponry and aerospace systems.
Impact on the U.S. and Global Supply Chains
China had already tightened control over rare earths earlier this year, adding more elements to its export control list as trade tensions with Washington intensified. That decision led to temporary global shortages, disrupting electronics, energy, and defense supply chains.
Under the new measures, export licenses are unlikely to be issued to arms manufacturers or chip industry players, marking a clear response to the U.S. restrictions on semiconductor exports to China.
Even the technologies used to mine, process, or manufacture magnets from rare earths are now subject to strict government approval before they can be exported. Chinese companies are banned from engaging in foreign joint ventures or collaborations related to rare earths without explicit authorization.
The new guidelines outline restricted areas in detail, including:
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Mining, smelting, and separation processes
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Manufacturing of magnetic materials
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Recycling of rare earths from secondary sources
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Equipment assembly, maintenance, and upgrades
This tightening could severely affect the U.S. rare earth mining sector, which has the resources but lacks large-scale refining and processing infrastructure. Currently, most of the raw materials extracted in the U.S. are sent to China for processing — a dependency that Washington has been trying to reduce for years.
A Strategic Move in the U.S.-China Trade Rivalry
Experts see this as Beijing’s direct response to Washington’s semiconductor export bans and other restrictions targeting China’s AI and defense capabilities.
“China’s move is a mirror image of U.S. actions,” said trade analyst Alex Capri, noting that the timing of the announcement is “specifically calibrated” ahead of the anticipated Xi-Trump summit.
“The new regulations target key vulnerabilities in the U.S. electronics and defense supply chains,” Capri added. “Beijing is signaling that if Washington wants to maintain its tech advantage, it can’t do it without Chinese materials.”
What Are Rare Earths and Why Are They So Important?
Rare earth elements are a group of 17 chemically similar metals essential for manufacturing a wide range of advanced technologies. Despite the name, most are relatively abundant in nature. However, they are considered “rare” because they are rarely found in concentrated, easily mineable deposits — and extracting them safely is a complex, environmentally hazardous process.
Some of the most important rare earth elements include:
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Neodymium – Used in powerful magnets for electric vehicles, wind turbines, and computer hard drives.
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Europium and Terbium – Key in producing LED screens and display panels.
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Yttrium – Used in lasers, superconductors, and defense technologies.
Because of their unique magnetic, luminescent, and electrochemical properties, rare earths are vital for renewable energy, aerospace, electronics, and military equipment — sectors driving the global economy and technological innovation.
China’s Dominance in Rare Earth Processing
While countries such as the United States and Australia have significant rare earth deposits, China controls most of the refining capacity. According to the International Energy Agency (IEA), China accounts for roughly 61% of global rare earth mining and 92% of global processing.
This dominance gives Beijing substantial leverage in international trade and technology development. Experts warn that if China further restricts exports, it could lead to supply chain bottlenecks and price spikes in industries reliant on rare earth materials.
Global Repercussions and Market Response
Following the announcement, global markets reacted with caution. Prices of rare earth elements such as neodymium and dysprosium surged amid fears of tighter supply. Shares of Western tech and defense companies that depend on these materials saw minor dips.
Meanwhile, the U.S. Department of Commerce reiterated its commitment to diversifying supply chains, announcing plans to accelerate domestic mining and build new refining facilities. However, experts believe it will take years before Western nations can reduce their dependency on Chinese rare earths.
The European Union, Japan, and South Korea have also expressed concern, urging Beijing to ensure that export restrictions do not further strain global supply chains already recovering from geopolitical tensions and pandemic-related disruptions.
A New Phase in Tech Geopolitics
China’s move marks a new phase in the U.S.-China economic rivalry, where raw materials and advanced technologies have become tools of geopolitical leverage. By tightening control over rare earth exports, Beijing is reinforcing its dominance in one of the world’s most critical sectors while sending a clear message to Washington ahead of high-stakes trade talks.
As both sides prepare for the Xi-Trump meeting, the world is watching closely. With each nation leveraging its own strategic advantages — the U.S. in chips and China in rare earths — the outcome could redefine the future balance of global technology and trade power.