China has imposed stricter export controls on rare earths and other critical materials used in advanced technology manufacturing, signaling a strategic move amid ongoing trade negotiations with the United States. Rare earths, essential for products ranging from solar panels to smartphones, are a key lever for China, which processes around 90 percent of the world’s supply. The new rules require foreign companies to obtain Chinese government approval before exporting products containing even small amounts of rare earths, and they must specify their intended use. The measures also extend to lithium batteries and certain forms of graphite, which are widely used in electronics, energy storage, and other high-tech applications.
The Chinese Commerce Ministry stated that the updated regulations are aimed at safeguarding national security. Officials emphasized that licenses will likely be denied to overseas defense manufacturers and selected companies in the chip industry. Export restrictions now cover not only raw materials but also the technologies used for mining, processing, magnet manufacturing, and recycling of rare earths. In addition, Chinese companies are prohibited from collaborating with foreign firms on rare earth projects without prior government approval. The announcement also clarifies processes subject to regulation, including assembly, maintenance, repair, debugging, and upgrading of equipment used in rare earth production.
These developments could have significant implications for the United States, which has domestic rare earth mining operations but limited processing capacity. By controlling access to these materials and associated technologies, China mirrors the approach the US has taken to restrict the export of advanced chip-making equipment to China. Analysts note that this strategic timing appears closely linked to the anticipated meeting between Chinese leader Xi Jinping and US President Donald Trump later this month. Trade expert Alex Capri highlighted that the move targets vulnerabilities in US electronics and defense manufacturing, effectively creating leverage in ongoing negotiations.
Rare earths encompass 17 chemically similar elements, including neodymium, yttrium, and europium, which are vital for producing high-tech devices. Neodymium, for example, is used in powerful magnets for loudspeakers, computer hard drives, electric vehicle motors, and jet engines, contributing to smaller, more efficient designs. While these elements are relatively abundant in nature, extracting and refining them is challenging and hazardous. China currently controls approximately 61 percent of global rare earth production and 92 percent of processing, giving it a near monopoly on the global supply chain. The tightened export controls reinforce China’s dominant position, shaping how advanced technologies and strategic materials are sourced, processed, and supplied worldwide.
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