China has escalated its rare earth export controls, a move that could reshape global supply chains and intensify geopolitical tensions ahead of a critical meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea later this month. The Ministry of Commerce’s announcement expands restrictions on processing technology, targeting foreign defence and semiconductor users—a strategic play that underscores Beijing’s growing leverage in the global tech and defence sectors.
The latest controls build on sweeping restrictions introduced in April, which initially triggered global supply shortages before partial deals with the U.S. and Europe eased—but did not fully resolve—the crunch. China’s dominance in rare earth production, accounting for over 90% of the world’s processed rare earths and magnets, gives it significant power in global trade negotiations. These elements are critical in everything from electric vehicles and aircraft engines to military radars, making Beijing’s latest move a calculated geopolitical maneuver.
“From a geostrategic perspective, this helps with increasing leverage for Beijing ahead of the anticipated Trump-Xi summit in Korea later this month,” said Tim Zhang, founder of Singapore-based Edge Research. The restrictions now explicitly bar overseas defence users from obtaining export licences, while semiconductor-related applications will be reviewed on a case-by-case basis. Additionally, China will expand restrictions on rare earth magnet production technology, limiting exports of certain components and assemblies containing restricted magnets.
The move comes as U.S. lawmakers push for broader bans on exporting chipmaking equipment to China, highlighting the escalating tech war between the two superpowers. While major semiconductor firms like Samsung, TSMC, and SK Hynix have yet to respond to the latest developments, the restrictions could force global manufacturers to rethink their supply chains and seek alternative sources.
Despite the tightening controls, China has recently increased rare earth shipments, granting more export licences in recent months. However, some users still report difficulties in securing supplies. The Ministry of Commerce acknowledged these concerns, stating that the latest restrictions are limited in scope and that “a variety of licensing facilitation measures will be adopted.”
The new rules also prohibit Chinese companies from collaborating with overseas firms on rare earths without explicit permission from the ministry. Overseas manufacturers using Chinese components or machinery must now apply for licences to export controlled items, further tightening Beijing’s grip on the global supply chain.
This latest move by China is likely to accelerate efforts by the U.S. and its allies to diversify their rare earth supply chains, potentially spurring investment in alternative sources and recycling technologies. It also raises questions about the stability of global trade in critical minerals, particularly as tensions between Washington and Beijing continue to rise.
As the Trump-Xi meeting approaches, the rare earth export controls serve as a reminder of China’s strategic influence in the tech and defence sectors. The outcome of this summit could determine whether the world sees further escalation or a cautious thaw in trade relations.