China’s Ministry of Commerce recently announced plans to expand its export control list to include five additional rare earth elements, such as holmium, erbium and thulium. The decision marks another step in Beijing’s long-term strategy to deepen global dependence on its supply chain, mirroring Washington’s own economic security logic. Both powers are building parallel systems of control, each learning from the other’s playbook.
A critical turning point has been reached in the trade and technology war between the world’s two largest economies: While one side restricts access to key technologies such as semiconductors, the other limits the supply of rare elements – an essential component in producing those very technologies. How much of this deadlock will be resolved in the upcoming meeting between Chinese President Xi Jinping and U.S. President Donald Trump remains uncertain.
There are 17 rare earth elements, grouped as light, medium or heavy. The heavy ones are the most valuable because they are harder to extract and indispensable for high-tech manufacturing. Europium is essential for television screens, while cerium is used for glass polishing and oil refining. Despite their name, these metals are not actually rare. The challenge lies in refining them, a complex and environmentally demanding process where China dominates.
According to the U.S. Geological Survey (USGS), global reserves amount to 110 million tons, with 44 million tons in China alone. Vietnam, Brazil, Russia and India also hold large deposits, but none possess China’s refining capacity or technological ecosystem. China controls about 70% of global mining, 90% of separation and processing and 93% of magnet production.
With the new restrictions, Beijing is extending its reach even further, covering not only exports, but also mining, refining, magnet production and recycling technologies. From now on, anyone wishing to use these elements must obtain a license from China. The message is clear: Beijing’s hard-earned expertise is no longer for sale.
Rare earth elements are essential for advanced weapon systems, found in F-35 fighter jets, nuclear submarines, Tomahawk missiles, radar systems and drones. That is why Washington views China’s new measures as a direct strategic threat. These controls are not simply economic tools; they are leverage, a quiet but powerful form of influence in global politics.
The restrictions will take effect on Dec. 1, likely giving Beijing an upper hand in upcoming trade negotiations. Beyond short-term bargaining, however, this step signals the creation of a long-term economic security regime. What begins as a bargaining chip often becomes part of the relationship’s very nature. Even if a potential Xi-Trump meeting later this October leads China to make limited concessions, the “rare earths card” will remain permanently on the table. It has evolved from a temporary tactic into a structural element of China’s economic strategy, one that is unlikely to ever be fully withdrawn.
Ironically, just as Washington’s pressure pushed China to become self-reliant, Beijing’s counter-measures are now forcing the U.S. down the same path. The U.S. is racing to rebuild domestic supply chains and reduce dependence on China.
In July, the Department of Defense approved the purchase of a 15% stake in MP Materials, the only company currently operating a rare-earth mine in the U.S. With the Pentagon's support, MP Materials will open a second magnet-production facility by 2028, boosting its capacity to 10,000 metric tons per year.
Washington is also expanding access to rare earths through global partnerships. In April, it signed an agreement with Ukraine, securing access to critical minerals in exchange for reconstruction aid. In May, MP Materials reached a deal with Saudi Arabia’s Ma’aden, aiming to build a new supply chain inside the kingdom.
These moves reflect a broader transformation in U.S. industrial strategy, one that mixes state investment and private enterprise to secure critical technologies. Under Trump, Washington has taken an unprecedented step: direct equity stakes in five major publicly listed companies, effectively adopting a public-private partnership model similar to China’s.
The holdings include Intel Corp. 10%, MP Materials 15%, Lithium Americas Corp. 10%, Trilogy Metals Inc. 10%, and a “golden share” in U.S. Steel Corporation. This marks a fundamental shift. The U.S. government is no longer just a regulator; it has become an active investor.
One of the earliest signs of China’s future dominance in rare earths came from reformist leader Deng Xiaoping, who famously remarked: “The Middle East has oil; China has rare earths.” From today’s perspective, that statement seems like a remarkable act of geopolitical foresight.
Yet there were also more recent signs that these elements would become central to the ongoing trade war. In 2019, Xi visited JL MAG Rare-Earth Co. in Ganzhou, Jiangxi Province – widely interpreted as a symbolic move highlighting the strategic importance of the sector. Since then, while the U.S. has focused much of its energy on containing China, it appears to have invested far less effort in addressing its own industrial gaps.
China’s export restrictions are not just about trade; they signal a shift in the architecture of global power. By mastering the production, refining and export of critical materials, Beijing is asserting itself as a rule-maker rather than a supplier.
A Bloomberg analysis last year found that China now leads the world in five of 13 key technologies, and is closing the gap in seven more, including artificial intelligence and robotics. It already dominates in electric vehicles, automotive software, lithium batteries and solar panels, while developing innovative pharmaceuticals that defy the old cliche – “America innovates, China imitates.”
During the Cold War, ideologies clashed – capitalism and communism stood as rival belief systems shaping global alliances. The competition had an ideological tone. In today’s new Cold War, the battlefield looks very different. What now collide are governance models, development strategies, economic corridors, and supply chains.
The world is no longer divided by political doctrines, but by who controls the routes of production, trade and innovation. Although this new rivalry is often framed as a struggle between “authoritarianism and liberal democracy,” that narrative finds few believers. The world’s emerging economies view it instead as a contest for technological independence and strategic resilience. China’s new export controls on rare earth elements are also part of the struggle for control over global supply chains.
