China Tightens Grip on Rare Earths: Imposes Export Controls on Processing Tech Ahead of Xi-Trump Meeting

China’s Ministry of Commerce on Thursday announced a tightening of its rare earth export controls by expanding its restrictions on processing technology. The move aims to leverage Beijing’s dominance amid ongoing trade friction with Washington. The announcement from the ministry comes days before US President Donald Trump and his Chinese counterpart Xi Jinping are scheduled to meet in South Korea, on the sidelines of the Asia Pacific Economic Cooperation in the last week of October.

Beijing dominates the production and export of rare earth minerals and accounts for about 60% of global mine production and 90% of global processing capacity and permanent magnet output. The country has been leveraging its dominance in the sector and been weaponising export of rare earth minerals to push back against the US’s aggressive tariff policies.

After announcing restrictive measures on rare-earth minerals in April, the latest restrictions on exporting the technology will be expanded to more types of magnets, according to reports. Equipments used to recycle rare earths will now require a licence to export. Overseas manufacturers using any Chinese components or machinery are also required to apply for licences to export controlled items, the ministry said.

Further, the announcement on Thursday also clarified for the first time the targets of China’s restrictions, which includes overseas defence users. They will not be granted licences while applications related to advanced semiconductors will only be approved on a case-by-case basis.  Chinese companies working overseas are also required to take prior permission from the ministry before working with companies overseas. However, it is unclear how Beijing plans to implement the new restrictions, which will likely further disrupt global supply chains involving rare earths.

Use it for Yourself: Chinese Rider for Rare Earth Supply to India

China is seeking assurance from India that heavy rare earth magnets supplied by Beijing will not be re-exported to the US and will be used only to meet domestic needs, before commencing shipments of these critical components to companies in India, the Economic Times reported.

“Certain overseas organisations and individuals have been directly or indirectly transferring or supplying China-origin rare earth controlled items, either in their raw form or after processing,” the Chinese ministry said, adding that the items have been used in sensitive fields such as defense. “Such actions have had a negative impact on international peace and stability,” it said.

Electric vehicle makers are the largest consumers of these magnets, which are crucial for the vehicle’s components. Other high tech industries also use these magnets, including renewable energy, electronics manufacturing and aerospace and defense. India imported 870 tonnes of rare-earth magnets amounting to ₹306 crore in financial year 2025 alone according to a report by ET.

While China has resumed supplies of these magnets to companies in South East Asia and Europe, export licences are yet to be issued to vendors supplying to India.

“China wants to ensure that the heavy rare earth magnets supplied to India do not reach the US,” a government official familiar with the matter told the ET.

Exports Spike to Six-Month High After Export Restrictions

Export of China’s rare-earth products spiked to a six-month high in July in the backdrop of stricter export regulations in April, calculations by Bloomberg News revealed. Exports hit a low in May after China launched curbs as the slump in global supply escalated tensions between Washington, the European Union, and Beijing.

Making America Great Again through Rare-Earth Production

The US was the world’s largest producer of rare-earth minerals during the early 1960 up until 1980s, before China began to scale up its efforts. Low-cost operations enabled Beijing to push back the US hegemony in the market with cheap rare earths, whose near-monopoly is unparalleled even today. The US in July has made its biggest move against this Chinese dominance, with the Pentagon planning to buy key American producer to secure the supply of magnets crucial for military and others.

The Department of Defense agreed to a $400 million equity investment in MP Materials Corp, a mining company, coupled with $1 billion in funding from JP Morgan Chase & Co and Goldman Sachs Group.