China signaled its intention to use its dominance in the rare-earths market as leverage when it announced a broad campaign to stop the illegal export of critical minerals just one day before high-level trade talks with the United States.
China cracks down on rare-earth minerals before trade talks with US
A number of Chinese government agencies convened in the southern port city of Shenzhen on Friday May 9, including the ministries of state security, public security, commerce, and customs. The agencies pledged to strengthen enforcement of export controls on strategic minerals in a formal statement issued after the meeting.
Authorities reported a growing number of cases of foreign organizations working with domestic actors to smuggle materials that are prohibited, including tungsten, gallium, germanium, antimony, and medium to heavy rare-earth elements. Although officials did not identify the nations in question, they did stress that smugglers are always changing how they evade detection.
For many essential minerals, especially rare-earths, China dominates the global supply chain. These materials are essential for the production of defense technologies, sophisticated electronics, and electric cars. The nation is the top producer, supplier, and miner of rare-earth magnets, which are essential parts of everything from smartphones to missile systems.
Bejiing and export restrictions
Beijing has gradually increased its export control over these materials, frequently enforcing restrictions in retaliation for trade actions taken by the United States. Last year, the Biden administration restricted China’s access to expensive memory chips that are essential for the development of artificial intelligence. In response, Beijing tightened regulations on graphite and prohibited the export of gallium, germanium, and other high-strength materials to the United States.
More recently, China retaliated with more export restrictions on rare-earth metals used in American defense programs, such as missile systems and F-35 fighter jets, after President Donald Trump announced broad tariffs in April, dubbed the “Liberation Day” tariffs.
The United States continues to rely on Chinese supply chains in spite of its attempts to lessen its reliance on China by developing domestic rare-earth processing and magnet manufacturing capabilities. This dependence has strengthened Washington’s efforts to find substitute supplies of vital minerals in areas like Greenland and Ukraine.
Most analysts predict that China will use its hegemony in mineral exports as leverage in the next trade negotiations. Senior officials from both countries plan to meet in Switzerland this weekend as part of broader talks on reducing tariffs. The main topic of discussion will be whether the United States can obtain concessions on rare-earth exports, or at the very least postpone additional restrictions.
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