China has transformed rare earth elements into a sophisticated geopolitical weapon, implementing the most stringent export controls in history and fundamentally reshaping global technology and defence supply chains. In a dramatic escalation through 2025, Beijing has progressively restricted access to critical minerals essential for electric vehicles, advanced semiconductors, military systems, and renewable energy infrastructure.
Starting in April 2025, China’s Ministry of Commerce introduced initial restrictions on seven rare earth elements through Announcement No. 18, targeting oxides and neodymium-iron-boron (NdFeB) magnet materials critical for EV motors and wind turbines. By October 2025, the restrictions expanded dramatically. Announcement No. 61 added five additional elements—holmium, erbium, thulium, europium, and ytterbium—bringing the total controlled materials to twelve rare earth elements. The expansion also incorporated dozens of refining technologies into China’s strategic control list.
Most significantly, China’s December 1, 2025 regulations denying export licenses to companies affiliated with foreign militaries represent an unprecedented weaponization of supply chains. Defence applications are now automatically rejected. Companies producing rare earths and magnets require Chinese export licenses even if the final products contain only 0.1% Chinese-sourced materials, effectively granting Beijing extraterritorial control over global supply chains.
“We are likely entering a phase of structural bifurcation—China consolidating its value chain while the U.S. and its allies accelerate their own initiatives,” notes Neh Mukher of Benchmark Mineral Intelligence. This bifurcation extends beyond commerce; it threatens the operational capacity of Western military systems. The U.S. F-35 fighter, Virginia-class submarines, and Tomahawk missiles all depend on rare earth magnets produced through Beijing-controlled supply chains.
Advanced semiconductor restrictions add another layer of strategic pressure. Exports of chips at 14 nanometers or more advanced, memory chips with 256 layers or greater, and semiconductor manufacturing equipment are now subject to case-by-case review. This policy mirrors U.S. export controls but grants China reciprocal leverage over global technology sectors where China maintains 90% of global rare earth processing capacity—a monopoly unmatched in any other critical mineral.
China accounts for approximately 70% of global rare earth mining, 90% of separation and processing capacity, and 93% of permanent magnet manufacturing. This dominance creates vulnerabilities that transcend individual companies or nations. Global EV demand, projected to require 50% more rare earths by 2026, now faces potential disruption. Europe’s defence rearmament, renewable energy expansion, and the semiconductor industry all remain hostage to Beijing’s export discretion.
The Chinese government has characterized these measures as defensive responses to Western technology restrictions. However, industry analysts and Western policymakers view them as offensive strategic positioning. “China has laid a rare earths trap for the West,” concluded the Financial Times analysis. The trap tightens as global demand accelerates while Chinese processing dominance remains absolute.
– Rashmi Kumari
