Beijing Tightens Rare Earth Exports, Expanding a Geopolitical Tool
In a move with immediate implications for global manufacturing and defense, China announced sweeping export controls on rare earths and related technologies on October 9. The policy expands restrictions beyond the seven rare earths first targeted in April, now covering nearly all of the recognized 17 elements and extending to midstream and downstream technologies. Foreign companies—even those without Chinese involvement—will need government approval to export goods containing a minimum value threshold of Chinese-sourced rare earths or products made with China’s rare-earth technologies. The rule also bans exports of rare earth materials used in the defense sector and imposes case-by-case approvals for certain high-end technologies.
Why Rare Earths Matter—and Why Beijing Is Raising the Stakes
Rare earths are not actually rare in the natural world, but they are difficult to mine, process, and refine. They underpin a vast array of modern goods—from smartphones and electric vehicles to wind turbines, missile guidance systems, and advanced semiconductors. In 2024, China accounted for at least 60% of the world’s annual rare earth production and processed nearly 90% of global supply. By tightening controls, Beijing leverages a critical bottleneck in global high-tech manufacturing and defense systems.
Global Repercussions: The West Moves to Diversify
The new restrictions accelerate a trend already underway: Western economies are racing to diversify away from over-dependence on a single supplier. Washington and its allies, including Canada, are ramping up efforts to reshore, diversify, and secure alternative sources for critical minerals and the processing capacity needed to turn them into usable components.
Public policy responses feature a mix of incentives and regulatory tools. Canada has rolled out a Critical Minerals Strategy, pledging hundreds of millions of dollars to accelerate domestic production and processing. The United States has pushed substantial funding into critical mineral initiatives, with billions earmarked to bolster production and domestic refining capacity. Japan and Australia have likewise intensified investments in refining projects and strategic reserves, signaling a coordinated Western approach to reduce exposure to China’s export controls.
<h2 Strategic Leverage: The Regulatory Dimension of Global Supply Chains
Beyond restricting raw materials, Beijing’s policy introduces a regulatory lever: tech manufacturers must disclose who will use Chinese-sourced materials and for what purpose to obtain approvals. In practice, this could delay or constrain shipments of advanced chips and other high-end components by months, depending on case-by-case outcomes. The potential for Beijing to condition or deny approvals injects strategic intelligence into the global supply chain, complicating planning for firms in Japan, South Korea, and Taiwan, all of which rely on Chinese machinery and know-how for rare earth processing.
<h2 Defence, Aerospace, and the Drag on Innovation
Rare earths are central to defense technologies, from fighter jets to radar and precision-guided munitions. A sustained constraint on China’s exports could impact the U.S. and allied defense industries, which already rely heavily on Chinese-produced materials. Analysts warn that if Beijing enforces the new rules aggressively, it could complicate production timelines for advanced semiconductors and other high-tech goods by three to six months—enough to influence defense procurement and industrial planning in the near term.
<h2 The Road Ahead: A Prolonged, Fragile Path to Diversification
Experts expect further twists in U.S.–China trade dynamics, with both sides maintaining a hard line in the near term. Even if leaders meet at the October APEC summit, major concessions are unlikely. The broader Western strategy will continue to emphasize diversification and resilience, but rebuilding robust, independent supply chains is capital-intensive and technologically demanding. The path to self-sufficiency will be L-shaped: slow, costly, and uneven across sectors.
<h3 Looking Forward
As the West accelerates reshoring and diversification, China’s latest export controls will serve as a stress test for global manufacturers, policymakers, and defense planners. The outcome will shape the cadence of international collaboration on critical minerals for years to come, reinforcing the need for transparent supply chains, diversified processing capacity, and strategic stockpiling to cushion future shocks.
