ANALYSIS: China’s New Export Controls Turn Its Rare Earth Monopoly into Leverage
China’s Ministry of Commerce, which announced new rare earth mineral restrictions on October 9 (Wikimedia Commons).
China’s Ministry of Commerce announced on October 9 new export controls on rare earth minerals that reshape global supply chains and strain the geopolitical order. The new controls expand on existing restrictions by requiring an export license for five additional rare earth minerals when exporting directly from China and now require a license when trading extraterritorially if certain goods contain more than 0.1 percent rare earth minerals originating from China. These new restrictions, announced in the Ministry of Commerce’s “Announcement No. 61 of 2025,” are the strictest rare earth export controls ever put in place by China.
While they are the most restrictive yet, the October 9 controls are just the latest manifestation of China’s tightening grip on the rare earth supply chain. China’s chokehold on the rare earth trade signals that it is shifting to wielding its near-total global monopoly of rare earth mineral production as a weapon of geopolitical influence. For the United States, reliant on China for 77 percent of its rare earth imports in 2024, that shift could mark the beginning of a new era of vulnerability if it can’t escape its dependence.
The 17 rare earth minerals, made up of the 15 lanthanide elements, scandium, and yttrium, are essential for the production of components in chips and permanent magnets that are needed for most military equipment and consumer electronics. In order to be industrially usable, rare earths must be mined and refined. The mining of rare earths is a complex and expensive process of extracting the rare earth ore from the rock of a natural deposit, while refining involves isolating the individual rare earth elements from the ore using chemical and technological processes.
Rare earths are critical for geopolitical competition because they’re required for the production of permanent magnets necessary for military equipment. For example, the production of an F-35 fighter jet requires 400 kilograms of rare earth minerals, while a Virginia-class submarine requires 417 kilograms. Other military equipment reliant on rare earths include Tomahawk missiles, radar systems, and drones.
China commands a near-total monopoly over the global supply of rare earths due to its massive reserves and refining capacity. It holds the world’s largest deposits of rare earth minerals, at 44 million metric tons, and mines over 60 percent of the world’s rare earths. However, China’s real dominance comes from its refining capacity. It’s not enough to just possess rare earth reserves; the complex process of refining is what actually makes them industrially usable. For example, Brazil has the third-largest rare earth reserves yet produces none because it lacks the refining infrastructure. China, on the other hand, has almost monopolized the refining process since its 2023 ban on exporting rare earth refining technology. Today, China refines over 90 percent of the world’s rare earth minerals, meaning that almost all rare earth components in chips and magnet technologies had to first be refined in China. This level of control over the rare earth supply chain gives China a massive strategic advantage, which it is only now weaponizing.
On October 9, China’s Ministry of Commerce expanded restrictions on the trade of rare earths in the “Announcement No. 61 of 2025” controls. The new export controls add five more rare earth minerals to the list requiring a special permit from Beijing for trade. This means that exporters now need to apply for and receive a permit in order to export 12 of the 17 rare earth minerals.
While this is significant, the most dramatic part of the October 9 controls are their extraterritorial restrictions. For the first time, Beijing is restricting the trade of rare earths that occur outside of China’s borders. According to the new controls, foreign companies will now need to receive approval from the Ministry of Commerce to trade magnets or semiconductor materials that contain more than 0.1 percent rare earths. This new rule applies to any cross-border transaction. For example, if the United States wanted to export a technology that contains some level of Chinese rare earths to Germany, it would need a permit from the Chinese Ministry of Commerce. While it’s unclear how exactly China will enforce trade rules outside its own borders, the escalation is significant.
In the announcement, the Ministry of Commerce cited “[safeguarding] national security and national interests” as the reason for the new controls. The restrictions explicitly target military applications of rare earths, stating that “export applications for items destined for foreign military users […] will not be permitted.”
The timing of these new controls is intentional. The Ministry of Commerce’s announcement comes just three weeks before the beginning of the Asia-Pacific Economic Cooperation Forum (APEC) summit in South Korea. The summit, slated to begin on October 31, is expected to be attended by U.S. President Donald Trump. Trump, who engaged China in a trade war this summer, has been seeking a trade deal with Beijing.
In April, the United States imposed 145 percent tariffs on China due to concerns over the trade deficit and the fentanyl trade. China retaliated with 125 percent tariffs on the United States. In May, those tariffs were reduced to 30 percent and 10 percent respectively, and have since been paused pending further trade talks. With Trump and Chinese President Xi Jinping expected to meet on the sidelines of the APEC summit, there are hopes that a more permanent trade deal can be established.
The détente of trade relations was effectively erased on October 9 when, in response to China’s new rare earth restrictions, Trump imposed 100 percent tariffs on China, saying that these new export controls were “absolutely unheard of in International Trade.” These new tariffs are to go into effect on November 1, although U.S. Treasury Secretary Scott Bessent has expressed that he believes a deal will be reached before then, and they won’t be necessary.
China’s timing of imposing these new export controls—just weeks before a potential Trump-Xi meeting—could be a sign that Xi is looking for leverage in trade negotiations. As rare earth minerals are both extremely critical for military and consumer technology, and are almost exclusively controlled by China, their restriction could be a key tool that Xi can use over the United States. Given this, it’s possible that trade negotiations in South Korea lead to the relaxing or elimination of these new controls. In fact, Kristin Vekasi, the Mansfield chair of Japan and Indo-Pacific Affairs at the University of Montana, says that the new export controls are nothing more than “pre-meeting choreography” before APEC.
However, the October 9 controls don’t exist in a vacuum and are part of an escalating pattern of China flexing its control over global supply chains. In December 2023, China banned the export of rare earth technologies used for rare earth separation, which are critical for making the minerals industrially usable. The restriction of these technologies effectively locked in China’s dominance over the sector, as it’s now much more difficult for any other nation to begin their own production process without the necessary technology. In April 2025, at the height of the previous tension over tariffs, China restricted the exports of seven rare earth minerals. Finally, China restricted five more minerals and extraterritorial trade in the October 9 controls. This pattern indicates that the October 9 controls are part of a longer effort to consolidate control over the rare earths supply chain.
If it continues, this pattern of consolidation could put the United States in a very difficult position. The United States was the largest importer of Chinese rare earths in 2023, importing over $22.8 million worth of products, while sourcing 70 percent of its rare earths from China between 2020 and 2023. These imported rare earths are used in the production of both consumer technology and U.S. military equipment. If the October 9 controls hold, and China continues its consolidation of rare earth power, it would be a huge hit to U.S. defense capacity. In fact, as China continues to expand its manufacturing ability, it’s already outstripping the United States in terms of defense production. Even before these new controls, China was estimated to be five to six times faster at defense production than the United States. The October 9 controls—and any future restrictions—will only further widen this gap in production ability. As tension rises in Asia concerning control of Taiwan, disputes over the nine-dash line, and North Korea’s recent missile tests, a strengthening of Chinese defense capacity relative to the United States could prove decisive to the power balance of the region.
For the United States, there’s only one way forward—and it’s not another trade deal. Even if Presidents Trump and Xi are able to come to an agreement in South Korea, it will only prove to be a small delay in Beijing’s geoeconomic ambitions. If China’s monopoly of rare earth refining continues, then so too does the United States’ dependence on Chinese rare earths. At the upcoming meeting in South Korea, nothing short of a deal allowing the global free export of rare earth refining technology from China could break this dependency—a deal to which China has no incentive to agree. Therefore, the only solution for the United States is to decouple from China and find a way to establish its own domestic supply chain.
Domestic production of rare earths in the United States is not impossible. In fact, in 2024, the United States mined 45,000 tons of rare earth minerals from the Mountain Pass mine in California, the only significant active rare earth mine in the country. While the United States currently lacks the capacity to refine these minerals themselves, that may soon change. In 2022, the U.S. Department of Defense awarded a $35 million contract to MP Materials to build a full rare earth separation facility at Mountain Pass, which is expected to be operational in 2028.
China possesses a geoeconomic weapon. Its monopoly over rare earth minerals—which are critical for technology and military equipment around the world—gives it huge influence over how the international order operates. Yes, it’s true that the global economy is not a monolith. Rare earths aren’t the only “thing,” and there are many other factors and interdependencies that affect economic organization. However, it’s still true that China is in a unique position to project its power over the global economy through its control of rare earth minerals. The October 9 controls are evidence of just that, and the escalation of rare earth restrictions in recent years could be a sign that China itself is coming to realize the position it holds. For the United States, China’s strong hand corresponds to its own weak position at the table. In order for the United States to successfully escape its dependency on Chinese rare earth exports, it’s necessary to sever its own supply chain from China through domestic investment.
China’s October 9 export controls are not a shock. Instead, they represent the most recent step in a pattern of escalating restrictions and consolidation of control. No matter what happens in South Korea, it’s important that Washington remember this. The fight over rare earths cannot be solved by a single trade deal but only through long-term awareness and deliberate action.