China’s global control over rare earth metals a strategic goal since the 1990s

China’s new export controls on rare earth minerals and products made from them reflect a bid to dominate world markets for the strategic materials since the 1990s and have emerged as major tools in an escalating trade war with the United States.

“The Middle East has its oil; China has rare earths,” communist leader Deng Xiaoping said in 1992.

Deng said rare earth elements are “of extremely important strategic significance.” He vowed that China would develop policies and methods that “make the fullest use of the advantages of our rare earth resources.”

Today, technological advances have made China’s 80% share of the world’s reserves of 17 rare earth metals an even more valuable strategic tool.

Chinese leader Xi Jinping used control over rare earths last week as part of what analysts say is a drive for global supremacy and an effort to promote the Chinese communist system as it works to replace the United States as the world’s leading power.

The new controls, announced Thursday, apply to various rare earth metals and high-tech components. They expand on curbs announced in April.

---

SEE ALSO: Trump says China’s boycott of soybeans is an ‘economically hostile act’

---

The Commerce Ministry said the expansion of export controls on rare earth products will require Chinese and foreign companies to obtain government approval before exporting any items containing “even trace amounts” of Chinese-origin rare earths.

The restrictions are slated to go into effect early next month.

The ministry notice specifically mentioned controls on semiconductors and artificial-intelligence-related devices and components manufactured outside China if they contain magnets and materials made from Chinese rare earths.

All export licenses will be denied for military end users, the notice said.

Key rare earth elements include neodymium, dysprosium, samarium, holmium and erbium, which are essential for military weapons, commercial electronics and other equipment.

Many are used to make magnets and other components needed for missile guidance systems, drone controls and electric vehicles.

“Whoever controls rare earths holds a potential chokehold on the digital and military age,” said Army strategist Robert Maginnis.

Rising tensions

President Trump announced in response to the new Chinese export controls that the United States would impose an additional 100% tariff on Chinese goods on top of its 55% tariff.

Stock markets plummeted as a result until Mr. Trump issued a social media post Sunday saying, “Don’t worry about China, it will all be fine!”

Mr. Trump said the Chinese leader “just had a bad moment” and “doesn’t want Depression for his country and neither do I.”

Treasury Secretary Scott Bessent stepped up criticism of Beijing on Monday.

“The United States is pushing for peace in the world. China is financing war,” Mr. Bessent said on Fox Business Channel.

The rare earth supply chain vulnerability is not new.

China first weaponized rare earths in 2010 by cutting off exports to Japan over its dispute with Tokyo in seeking control of the Senkaku Islands.

The temporary cutoff hurt the Japanese auto industry, which relied on rare earths for vehicle manufacturing.

Since then, the defense industry and commercial manufacturers in the U.S. and Europe have done little to reduce reliance on Chinese rare earths.

As a result, the U.S. is saddled with a supply chain for rare earths controlled by Beijing, largely because a 40-year-old U.S. government policy has downplayed potential threats from China in promoting trade and engagement with the communist state.

Mr. Bessent said China is using the controls to gain leverage in a planned meeting between Mr. Trump and Mr. Xi later this month in Asia.

The U.S. and China are continuing trade talks in a bid to come to terms, he said.

“We have substantially de-escalated,” Mr. Bessent said.

“The 100% tariff does not have to happen,” he said. “The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we’ll see where it goes.”

The dispute is pitting China against the world, and the U.S. government is unsure what prompted it, he said.

“They have pointed a bazooka at the supply chains and the industrial base of the entire free world. And, you know, we’re not going to have it. China is a command and control economy. They are neither going to command [nor] control us. We are going to assert our sovereignty in various ways,” Mr. Bessent said.

Beijing responds

In Beijing, a Commerce Ministry spokesman said in a statement Tuesday that the controls are not export bans and that licenses will be granted to maintain the stability of global supply chains, state media reported.

China urged the U.S. to “correct its wrongdoings” and negotiate without “threatening or intimidating” with new U.S. restrictions.

The spokesman said the controls were intended to safeguard national and global security.

He made clear that the controls were imposed in retaliation for U.S. national security export controls that sought to prevent U.S. goods from bolstering the Chinese military.

The controls are China’s first imposition of a foreign direct product rule and highlight Beijing’s willingness to impose secondary sanctions, such as those imposed by the United States against Chinese entities.

New U.S. fees on Chinese ships at American ports have been met with Chinese port fees on U.S.-owned or U.S.-operated vessels.

The statement said China’s stance on trade and tariff wars remained unchanged. “We will fight if we must fight,” the spokesman said.

Retired Navy Capt. Jim Fanell said the rare earth controls are evidence that Mr. Xi is operating on a timeline for “rejuvenation” of China, an effort to achieve global dominance.

“Now that Xi has placed this export control deadline on the table, one that will immediately and adversely impact America’s national defense acquisition and development capabilities, there should be no doubt that he and the [Chinese Communist Party] have decided to cripple the U.S. military through this act,” said Capt. Fanell, a former Pacific Fleet intelligence chief.

America should now shift into a national emergency posture to counter the Beijing threat and be on guard for a Chinese attack in the Far East, he said.

Rare earth independence

Congress is considering bipartisan legislative measures to reduce U.S. reliance on Chinese rare earths and spur investment in domestic production and manufacturing.

The Rare Earth Magnet Security Act of 2025, introduced in the House, would offer tax credits for domestic rare earth magnet production and block the use of magnets containing material from adversaries such as China, Russia, Iran and North Korea.

A pending Senate bill, the Critical Minerals Security Act of 2025, would seek to reduce vulnerabilities by securing critical mineral and rare earth supply chains.

Nick Myers, CEO and co-founder of rare earth processing company Phoenix Tailings, said China’s strategic investment in processing instead of mining rare earths has led to a near-total domination of the worldwide production of strategic metals.

“The tank, the battleship, nuclear energy, wind energy, gas energy, all of it relies on rare earth metals,” he said. “And without it, our society is crippled not from a military standpoint, only from an actual everyday operation standpoint.”

The Chinese are playing at a different level now and “engaging in economic warfare,” he said. “They understand that warfare is not all kinetic, and they’re leveraging their economic power.”

Defense experts say the U.S. is years away from eliminating its reliance on China for rare earths despite the Japanese experience in 2010.

Japan sought help from the World Trade Organization, which ruled in 2014 that China’s rare earth ban was a violation. The WTO forced Beijing to end quotas on the minerals a year later.

In October 2020, during the first Trump administration, the president issued an executive order to reduce the vulnerability to a critical minerals cutoff.

President Biden issued an executive order in February 2021 that sought to reduce U.S. reliance on adversary supply chains.

Since then, alternative supply lines have been built up. They include Mountain Pass Materials, a rare earth and magnet producer in California, and the Lynas Kalgoorlie plant in Australia. Vietnam is increasing processing and separation production for rare earth exports to the West, primarily the U.S.

Environmental impact

A major problem for Western alternatives to rare earth development is the ecological impact.

China’s rare earth extraction in Inner Mongolia has produced large-scale ecological devastation because of the high volume of radioactive materials generated in the process.

“These restrictions and license applications will be used by China as negotiation tools in engagements with the U.S. and EU, with Chinese media outlets indicating that rare earths are China’s trump card to control the United States,” said an analyst who spoke on background.

Mr. Maginnis, the strategy expert, said the Pentagon is expanding the Defense Production Act to cover rare earth refining, and startup companies in Colorado and Texas are working on new extraction systems that minimize environmental impacts.

Other measures include allied linkages in mining and industry reengineering components that will reduce reliance on rare earth use.

“Crisis breeds creativity, and this one could achieve in a decade what complacency failed to do in 30 years,” Mr. Maginnis said.

Mr. Maginnis, author of the forthcoming book “AI for Mankind’s Future,” said China’s rare earth crackdown poses risks for Beijing. In the short term, it could disrupt defense contractors and chipmakers.

“But over time, it may awaken exactly what Beijing dreads most: a unified, self-reliant West,” he said.

“In this AI cold war, minerals are the new munitions,” he said. “Yet the free world still holds the ultimate arsenal: innovation, alliance and moral conviction that technology must serve people, not the party.”