China has announced stricter export controls on rare earth elements and other critical materials essential for advanced technology manufacturing, a move that could reshape global tech supply chains. The announcement comes amid ongoing trade tensions with the United States and ahead of a high-profile meeting between Chinese President Xi Jinping and US President Donald Trump later this month.

China’s Rare Earth Monopoly: A Strategic Advantage

Rare earth elements, a group of 17 chemically similar minerals including neodymium, yttrium, and europium, are crucial in producing high-tech products. From electric vehicle motors and jet engines to solar panels and smartphones, these elements make modern technology smaller, lighter, and more efficient.

China dominates the rare earth market, producing about 90% of the world’s supply and refining around 92% of processed rare earths, according to the International Energy Agency (IEA). This dominance gives Beijing substantial leverage over global technology and defense industries.

Under the new rules, foreign companies must obtain approval from the Chinese government before exporting products containing even small quantities of rare earths. Companies are also required to explain how the materials will be used. This formalizes previous restrictions on processing technology and overseas cooperation, reflecting China’s goal of safeguarding national security.

Expanded Controls: Lithium Batteries, Graphite, and Technology Transfers

The export restrictions also apply to lithium batteries and certain forms of graphite, both essential in electric vehicles, energy storage systems, and high-tech manufacturing. Analysts note that the regulations appear targeted at overseas defense contractors and high-tech companies, particularly in the United States, which rely heavily on Chinese rare earths.

These measures follow an earlier April 2023 announcement that added several rare earths and related materials to China’s export control list, triggering supply shortages worldwide. Under the latest rules, licenses for arms manufacturers and certain semiconductor companies are unlikely to be granted.

Tightening the Grip on Mining and Processing Technology

China is not just controlling raw materials—it is also restricting the export of technology related to rare earth mining, smelting, separation, magnet production, and recycling. Chinese companies are prohibited from working with foreign partners on rare earth projects without government approval.

Additionally, assembly, maintenance, repair, and upgrading of production equipment cannot be exported without permission. These rules could heavily impact the US, which has rare earth mining operations but limited processing and refining infrastructure.

Impact on US Technology and Defense Industries

Experts describe China’s move as a direct response to US restrictions on exporting advanced chip-making equipment to China, which the US has used to slow Beijing’s development of high-performance artificial intelligence (AI) chips with potential military applications.

Trade analyst Alex Capri notes that the timing of China’s announcement is “strategically aligned” with the upcoming Xi-Trump summit. By controlling rare earth exports, China targets key vulnerabilities in US electronics and defense manufacturing, signaling that rare earths are now a geopolitical bargaining tool.

What Are Rare Earth Elements and Why They Matter

Rare earths may be abundant in nature, but they are rarely found in pure form and are difficult and hazardous to extract. Neodymium, for example, is used to create powerful magnets essential in loudspeakers, computer hard drives, electric car motors, and jet engines. These magnets improve efficiency while reducing size and weight.

China’s near-monopoly on both extraction and refining gives it unparalleled influence over the global supply chain. The country’s dominance in processing technology is a critical bottleneck for industries worldwide that depend on rare earth materials.

Global Implications: Supply Chains and Market Dynamics

The new export controls are expected to ripple across multiple sectors, including consumer electronics, renewable energy, automotive, and defense industries. Companies dependent on Chinese rare earths may face delays, price hikes, or sourcing challenges.

In response, governments and businesses in the US, Europe, and other regions may accelerate efforts to develop alternative rare earth sources and processing capabilities. Over the long term, this could reshape the global rare earth market and reduce dependence on a single dominant supplier.

Conclusion: Rare Earths as a Geopolitical Tool

China’s tightened regulations on rare earth exports highlight the strategic importance of these elements in the global economy. By limiting access to raw materials and processing technology, Beijing strengthens its negotiating position ahead of high-level trade talks.

As demand for electric vehicles, renewable energy, advanced electronics, and defense technologies continues to grow, rare earths will increasingly serve as both an industrial necessity and a geopolitical instrument. Businesses and policymakers worldwide are being reminded that access to these critical resources is not just an economic issue—it is a matter of global strategic influence.

Key Takeaways: China Tightens Rare Earth Export Rules