On October 9, China’s Ministry of Commerce introduced two announcements strengthening export controls on rare earth-related items. Announcement No. 61 controls exports of rare earth items with Chinese components to limit military and proliferation risks; humanitarian exports are exempt, and trade disruption will be minimised. Announcement No. 62 controls exports of rare earth technologies to prevent illegal transfers and sensitive use, with stricter enforcement to protect national and supply chain security.
The timing of China’s move, just ahead of the summit between Presidents Xi Jinping and Donald Trump in South Korea on the sidelines of the APEC leaders’ meeting, is no accident. It is a calculated maneuver placing rare earth minerals and magnets at the epicenter of geopolitical strategy. China is well aware that entrenched supply chain dependencies can tip the balance between states vying for technological supremacy and military security.
For decades, the United States enjoyed strategic dominance built upon technological innovation and military prowess. However, that edge is now compromised by an uncomfortable truth: the U.S. capacity to produce the tools of modern war depends heavily on Chinese-controlled rare earths. These seven minerals – spanning samarium, gadolinium, thorium, dysprosium, ruthenium, scandium, and yttrium – constitute the backbone of high-performance weapons systems, including fighter jets, radar arrays, missile guidance systems, and the increasingly sophisticated semiconductors at the heart of modern warfare.
U.S. weapons systems are highly exposed to the Chinese rare earth market. A recent report by Govini, “From Rock to Rocket: Critical Minerals and the Trade War for National Security,” laid bare the extent of this vulnerability: 80,006 components across 1,908 U.S. weapons platforms rely on minerals under China’s regulatory grip. With 91.6 percent of its systems affected, the Navy demonstrates how deeply these dependencies have penetrated U.S. defense infrastructure.
China controls about 70 percent of rare earth mining, 90 percent of separation and processing, and over 93 percent of magnet manufacturing. This nearly monopolized control presents a geostrategic chokehold that can constrict the lifelines of advanced industries, from electric vehicles and aircraft engines to military hardware. Even minerals mined in allied nations often take a circuitous route to Chinese refineries, amplifying the difficulty of achieving true independence. For example, of the antimony used in the U.S., only 19 percent comes from outside the sphere of Chinese influence, with China itself supplying 60 percent of the global antimony market and processing nearly one-third of refined material worldwide.
The sophistication of China’s approach is evident in its new licensing regime, which mandates Ministry of Commerce approval for any foreign exports containing “even in trace amounts Chinese-origin rare earths” or “those produced with proprietary extraction or processing technology.” Restrictions now affect not only raw materials, but also equipment, technology, and assemblies manufactured abroad using Chinese technology.
Such controls purposefully mirror and challenge the U.S. foreign direct product rule, which Washington has wielded to block semiconductor exports to China. But Beijing’s application is arguably broader and more far-reaching. The new rules will be phased in from December 1, with military export licenses to be systematically denied and those for semiconductor-related goods reviewed individually, adding a cumbersome layer of uncertainty to global supply chains.
The implications for geoeconomics and geopolitics are profound. China’s capacity to weaponize supply chains, turning export controls into diplomatic currency, has shaped the rhythm of trade talks and negotiations. Since Trump imposed “Liberation Day” tariffs in April and China enacted retaliatory restrictions, the U.S. auto industry and supply chains have faced slowdowns and production halts directly linked to the rare earths embargo.
In the three months following the initial export restrictions, the market felt the impact acutely: average prices for restricted mineral components soared by 5.2 percent, with gallium and antimony rising even higher. The volatility underscores both the economic costs and strategic risks: delays in military production, potential shortages of defense-critical components, and the erosion of domestic manufacturing resilience.
This is not isolated to rare earths. China has periodically imposed export controls on gallium, germanium, tungsten, tellurium, bismuth, molybdenum, and indium, reflecting a growing sophistication and adaptability in using minerals as leverage.
The intersection of mineral economics and national security policy is evident in the focus on “mine-to-magnet” supply chains, as laid out in the United States’ 2024 National Defense Industrial Strategy, which aims to provide for American defense needs through domestic production by 2027. Yet, despite allocating over $400 million since 2020, and concerted efforts from suppliers like MP Materials and Perpetua Resources, the scale and maturity of U.S. refining remain years behind China’s.
Now Beijing’s expansion of controls on foreign-made products and technologies increases the geopolitical stakes. Manufacturers overseas, even those sourcing from non-Chinese mines, now face regulatory hurdles if any production stage involves Chinese machinery or know-how. This expansion effectively globalizes China’s regulatory oversight, injecting uncertainty and compliance pressures into non-Chinese firms, especially in realms as sensitive as semiconductor research and development. With U.S. lawmakers calling for broader bans on chipmaking equipment exports to China and firms like Samsung, TSMC, and SK Hynix in the crosshairs, supply chain fragmentation and allied coordination are set to be defining themes of the next diplomatic phase.
From a broader strategic vantage point, China’s mineral leverage is about more than trade friction or negotiating chips; it helps shape the contours of future conflict and competition. Rare earths, magnesium, graphite, and fluorspar materials for aircraft, missiles, batteries, and optics constitute the invisible infrastructure behind military modernization. By tightening regulations and selectively negotiating export licenses, Beijing can project strength and signal the costs of technical decoupling.
Meanwhile, the U.S. response has evolved but remains constrained by legacy dependencies and regulatory inertia. Investments in antimony reserves in Idaho and improved sourcing of tellurium are positive signs, as is the establishment of integrated refining infrastructure. Yet, the momentum needed to match China’s dominance is nascent. Collaboration with trusted allies like Australia and Canada is urgent, as a diversified but coordinated refining network could begin to insulate critical supply chains. The overlooked potential of byproduct mining, where crucial minerals are secondary to larger extraction operations, needs regulatory and economic incentives to unlock new capacity.
The global rare earths contest foreshadows a world where resources and regulations outweigh overt military confrontations. Supply chain vulnerabilities, once a technical question for manufacturers, are now central to national strategy. China’s integrated control, extending beyond its borders, is the blueprint for this new reality. The United States, facing the uncomfortable arithmetic of dependence, must pursue a multidimensional response, investment, innovation, and alliance that matches the speed and scope of China’s evolving playbook.
This shift is urgent because the contest is not abstract, nor limited to theoretical risk. It is already playing out in real time through price spikes, production delays, disrupted service chains, and exposed weaknesses in U.S. weapons platforms. The consequences of inaction are not just expensive, but existential: a military unable to guarantee supply, an economy vulnerable to market manipulations, and a diplomacy weakened by invisible constraints.
As the Trump-Xi talks unfold in South Korea, rare earths and critical minerals will be more than bargaining chips. They are a live demonstration of how leverage in the age of supply chains can be wielded with precision, long before shots are fired. In the contest for technological leadership and national security, whoever controls the minerals controls the future. As the world accelerates toward its next inflexion point, the silent power of rare earths will determine the velocity and direction of geopolitics in the decades ahead. This is a great power competition in play.
