China to crack down on rare-earth materials ahead of US trade talks
Summary
China has announced a crackdown on the smuggling of critical minerals, coming just one day before trade talks with the U.S., in which rare earth restrictions could be on the table.
China has announced a crackdown on the smuggling of critical minerals, coming just one day before trade talks with the U.S., in which rare earth restrictions could be on the table.
Chinese authorities–including ministries of commerce, public security and state security and customs–convened a meeting in the southern port city of Shenzhen on Friday. According to an official readout, the agencies pledged to step up the enforcement of export controls on strategic mineral resources.
Officials at the meeting said that since China implemented export controls on critical minerals such as gallium, germanium, antimony, tungsten and medium and heavy rare earths, some overseas entities have colluded with domestic actors and constantly updated their smuggling methods in an effort to evade enforcement. They did not specify which countries were involved.
China currently dominates global supply of many critical minerals and holds a near monopoly on the rare-earths industry, serving as the world’s leading miner, refiner and producer of rare earth magnets–essential components in a range of military and civilian technologies, including electric vehicles.
Beijing has been tightening its controls on the export of critical minerals and related technologies in recent years and has used such measures in retaliation against U.S. trade restrictions.
In December, following the Biden administration’s move to restrict China’s access to advanced memory chips vital to artificial intelligence applications, Beijing responded by banning the export of gallium, germanium, antimony and several other ultra-hard materials to the U.S. It also imposed stricter reviews on graphite exports.
In retaliation to President Trump’s “Liberation Day" tariffs announced in April, Beijing imposed new export controls on rare-earth metals required for advanced defense systems such as missile-defense platforms, attack submarines and F-35 jets.
While the U.S. government has taken steps to reduce reliance on China–including the construction of new rare-earth processing and magnet-making facilities–progress has been slow. The U.S. remains heavily dependent on Chinese rare earths. This dependence is underscored by the Trump administration’s aggressive push for greater access to critical minerals–including nickel, lithium, cobalt, and graphite–in countries like Ukraine and Greenland.
Analysts expect Beijing to leverage its dominance and export control over critical minerals–particularly rare earths–as a bargaining chip in trade negotiations with the U.S.
With senior officials from the world’s two largest economies set to meet in Switzerland this weekend, all eyes are on whether the two sides can reach an agreement on rare-earth relief measures for the U.S., in addition to potential tariff reductions.
Write to Singapore Editors at singaporeeditors@dowjones.com
