In a dramatic escalation of trade tensions, China has announced sweeping new rare earth export control restrictions on Thursday that will fundamentally reshape the global technology and defense supply chains. China has leveraged its control of the sector in trade talks with the U.S. by threatening a disruptive global shortage of the critically-needed minerals. These comprehensive restrictions, affecting the nation that processes around 90 percent of the world’s rare earths, represent Beijing’s most aggressive move yet in its economic battle with Washington, strategically timed just weeks before an expected meeting between Chinese leader Xi Jinping and US President Donald Trump this month. The new controls extend far beyond simple export bans to include intellectual property, manufacturing technologies, and even products manufactured abroad that contain trace amounts of Chinese rare earths.

Understanding the Scale of China’s Rare Earth Dominance

How China Controls the Global Rare Earth Supply Chain

China’s control over rare earths is nearly absolute in the global marketplace. The nation accounts for approximately 70 percent of the global rare earth supply and processes around 90 percent of the world’s rare earths used in everything from solar panels to smartphones, military defense systems, and advanced semiconductor chips. This overwhelming dominance gives Beijing extraordinary leverage in international trade negotiations and allows the country to weaponize critical mineral supplies during periods of geopolitical tension.

The rare earth supply chain operates in distinct stages: extraction from ore deposits, processing and refining to separate individual elements, and transformation into specialized materials like magnets and alloys. China dominates every single stage of this value chain, giving it complete control over global supply. This comprehensive control means that restrictions announced in Beijing can immediately ripple through supply chains affecting manufacturers across North America, Europe, and Asia.

The Strategic Importance of Rare Earths in Modern Technology

Rare earths are a group of 17 chemically similar elements that are absolutely crucial to the manufacture of many high-tech products that define modern life. Although you may not be familiar with the names of these rare earths such as neodymium, yttrium, and europium, you use products containing these materials every single day. Neodymium is used to make the powerful magnets found in loudspeakers, computer hard drives, electric car motors, and jet engines that enable them to be smaller and more efficient than previous generations.

These minerals are not actually rare in terms of natural abundance, but they earn their name because it is extraordinarily unusual to find them in pure form in nature, and they are extremely hazardous to extract from ore deposits due to the radioactive materials and toxic chemicals involved in the extraction process. This combination of difficulty and danger in extraction makes China’s willingness to bear these costs a substantial competitive advantage, as most developed nations have opted to purchase refined rare earths from China rather than develop their own extraction and processing infrastructure.

Details of China’s New Rare Earth Export Control Restrictions

The “Major Upgrade” to Export Control Framework

The latest move is a “major upgrade for rare earth export control,” expanding restrictions from only raw materials to intellectual properties and technologies, said Dan Wang, China director at Eurasia Group. This expansion represents a fundamental shift in how China approaches export controls, moving beyond simple bans on raw materials to control the entire ecosystem of knowledge, equipment, and downstream products related to rare earth processing.

Overseas exporters of items that use even traces of certain rare earths sourced from China will now need an export license, the Ministry of Commerce said in a statement Thursday, citing national security grounds. Certain equipment and engineering technology will also be subject to controls. This requirement for licensing on products containing even 0.1 percent of domestically-sourced rare earths creates an unprecedented level of control, as virtually every high-tech device contains at least trace amounts of rare earth elements.

Timeline and Implementation of New Restrictions

The new rules on the export of rare earth materials will take effect on December 1, 2025, while restrictions on technologies and labor took effect immediately upon announcement. This staged implementation provides a transition period for businesses to adjust their supply chain strategies and apply for necessary export licenses. The new rules on the export of rare earth materials will take effect on December 1, while those on technologies and labor took effect immediately, according to official statements.

Specific Technologies and Processes Under Control

Beijing ramped up sweeping restrictions on rare earth exports on Thursday, expanding the list of minerals under control and extending curbs to target their production technologies and their overseas use, including for military and semiconductor applications. The restrictions specifically cover mining technologies, smelting and separation processes, magnetic material manufacturing, and recycling rare earths from other resources. Additionally, the assembly, debugging, maintenance, repair, and upgrading of production equipment are also prohibited from export without government permission.

Strategic Denial of Licenses: Military and Semiconductor Industry Targets

Defense Sector as Primary Target of Export Restrictions

To prevent the “misuse” of rare-earth minerals in the military and other sensitive sectors, companies tied to foreign militaries or placed on export-control or watch lists will be denied permits, the commerce ministry said. Applications for items that could be used in weaponry, terrorism or other military purposes will also be rejected. This targeting of defense applications represents the true strategic objective behind Beijing’s restrictions.

The measures are primarily designed to constrain US defense capabilities, as the defense sector relies heavily on rare earth magnets in advanced weapons systems, military communications equipment, and strategic defense technologies. By restricting access to rare earths, China aims to slow the development of next-generation military technology in the United States and allied nations.

Advanced Semiconductor Industry Under Case-by-Case Review

Applications for rare earth exports used in producing sub-14 nanometer semiconductors, advanced memory chips, semiconductor manufacturing or testing equipment, or artificial intelligence with potential military applications will be reviewed on a case-by-case basis, the ministry said. This provision creates substantial uncertainty for semiconductor manufacturers, as licensing approvals become unpredictable and dependent on political considerations rather than commercial factors.

The inclusion of artificial intelligence with military applications in the case-by-case review category directly targets US efforts to develop advanced AI systems for military purposes. This mirrors American export control strategies that have restricted semiconductor manufacturing equipment sales to China to prevent the development of advanced AI chips with potential military applications.

Broader Implications for Global Supply Chains and US Industry

Impact on US Defense and Electronics Manufacturing

The new restrictions create particular challenges for the United States, which has a significant rare earths mining industry but critically lacks processing and manufacturing facilities. US companies must either source rare earths from China or develop expensive alternative supply chains, giving Beijing enormous leverage over American manufacturing capabilities. The measures mainly target the defense sector, said George Chen, partner at The Asia Group, as part of Beijing’s efforts to dwarf the U.S. defense capabilities.

This vulnerability in the American supply chain reflects decades of offshoring manufacturing to China and failure to maintain domestic processing capabilities. Building alternative supply chains for rare earth processing would require years of investment and substantial capital expenditure, during which time American defense and electronics manufacturers remain dependent on Chinese exports.

Disruption to Existing Supply Contracts

The restrictions extend restrictions to companies and their foreign partners who work on rare earth technologies without government permission, and Chinese citizens are also prohibited from supporting overseas activities related to rare earth extraction and magnet manufacturing without approval from Beijing. Chinese citizens are also prohibited from supporting overseas activities related to rare earth extraction and magnet manufacturing without approval from Beijing. This provision prevents Chinese technical experts from providing consulting services or knowledge transfer to foreign companies developing alternative rare earth supplies.

Transition Period and Business Implications

A Chinese ministry spokesperson on Thursday said that there would be certain exemptions under the new rules, including exports for emergency medical situations or disaster relief. A “transition period” will also allow businesses to fulfill existing contracts and meet compliance requirements. However, the transition period appears designed primarily to allow Beijing to extract maximum concessions during trade negotiations rather than to genuinely facilitate business continuity.

Political Context: Timing Before Trump-Xi Meeting

Strategic Bargaining Chip for Trade Negotiations

The latest restrictions came just weeks before a potential meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. The two leaders are expected to meet in person on the sidelines of the Asia-Pacific Economic Cooperation forum during the last week of October in Gyeongju, South Korea. This timing is clearly strategic, as Beijing seeks to place restrictions in place before negotiations begin, creating leverage for trade discussions.

The new announcement can be viewed as “a series of bargains” that Beijing wants to place even before the next round of major trade talks, The Asia Group’s Chen said. “The Chinese side is getting more and more experienced in dealing with their counterparts and they know what their American friends want,” Chen added. This assessment suggests that China is methodically using rare earth controls as leverage to extract specific concessions from Washington, such as tariff reductions or relaxed US export controls on other sectors.

Previous Context: April 2024 Restrictions and May 2025 Trade Truce

China had already added several rare earths and related materials to its export control list in April 2024, as the trade war with Washington ramped up, which caused a major global shortage. Following negotiations, Beijing and Washington reached a trade truce in May 2025 that involved Beijing issuing single-use export licenses for rare earth magnets. However, the European Chamber of Commerce reported in a September 2025 survey that Beijing’s tight grip had cost at least one member “millions of euros” while other members cited inconsistent procedures for obtaining export approvals, suggesting that the May truce has not effectively resolved supply chain disruptions.

Expert Analysis and Future Outlook

Increased Bargaining Leverage for China

“Beijing has realized that it has leverage in this sector and is clearly not shy about using it,” said Wendy Cutler, a senior vice president at the Asia Society Policy Institute and former U.S. trade negotiator. The move could pressure Washington to make further concessions in ongoing talks, such as tariff reductions or relaxed U.S. export controls. This assessment from a former US negotiator acknowledges that Beijing has successfully identified and weaponized a critical American vulnerability.

Technology Transfer and Value Chain Evolution

These restrictions could further deepen other countries’ dependence on Chinese know-how while supporting Beijing’s efforts to move its own industries up the value chain, Wang added. By restricting access to technologies used in rare earth processing, China forces foreign companies to either depend on Chinese services or develop their own capabilities, which would require substantial investment and years of development. This dynamic strengthens China’s position as the global center for rare earth processing and transforms the country from a simple raw material supplier into an indispensable technology provider.

Structured Flexibility in Implementation

The transition window is likely to cushion some near-term impacts for companies, Eurasia’s Wang said, noting that “similar to how the U.S. tech export ban to China left room for American tech companies to lobby and apply for approval — most of them did get approvals.” “It will give China more power than just a blunt ban,” Wang said. This analysis suggests that China’s approach mirrors American export control strategies, creating a framework where approvals are theoretically possible but discretionary, allowing Beijing to extract concessions on a case-by-case basis.

Conclusion: Rare Earths as Geopolitical Weapon in Great Power Competition

China’s announcement of comprehensive new rare earth export control restrictions represents a critical escalation in the technological competition between Beijing and Washington. By controlling 90 percent of the world’s rare earth processing and now extending restrictions to cover intellectual property, technologies, and products manufactured abroad, China has created one of the most effective economic weapons available to a nation state. The restrictions are specifically timed to create maximum leverage in upcoming trade negotiations between Xi Jinping and Donald Trump.

The strategic implications extend far beyond simple supply chain disruption. These measures reflect Beijing’s understanding that it possesses near-monopoly control over critical materials essential to modern defense and technology systems. For the United States and allied nations, the restrictions underscore the urgent need to develop alternative supply chains, increase investment in domestic rare earth processing capabilities, and diversify sources of critical minerals. Without action, American dependence on Chinese rare earths will continue to constrain military capabilities and technological innovation while providing Beijing with ongoing leverage in trade negotiations.

The coming weeks will reveal whether these restrictions serve primarily as a negotiating tactic that will be partially relaxed following trade agreements, or whether they represent a permanent shift in Beijing’s approach to weaponizing critical mineral supplies. Either way, the rare earth restrictions demonstrate that in the era of great power competition, control over critical materials has become as strategically important as military capabilities themselves.

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