China plays its rare-earth ace as the U.S. leans on chip sanctions
China has just expanded export controls to include five new rare earth elements, holmium, erbium, thulium, europium and ytterbium, while tightening restrictions on refining tech and magnet production.
Even foreign firms using Chinese materials or equipment will now need Beijing’s approval.
And the timing? Just weeks before the Trump–Xi meeting, classic power play.
What’s happening?
China produces over 90% of the world’s processed rare earths, the backbone of EVs, aircraft engines and advanced military systems.
Washington’s main weapon has been chip sanctions.
Now Beijing is responding in kind, turning rare earths into leverage.
Defence contractors abroad won’t be granted licences, while semiconductor applications will be assessed case-by-case.
The rules mimic U.S. export controls but flip the pressure back toward Silicon Valley and Western defence supply chains.
Beijing’s mindset:
China’s message is simple: “We can cooperate, but if you want a tech war, we’ll fight it on our terms.”
Beijing no longer fears U.S. threats.
Its chip and AI industries are advancing rapidly on domestic innovation.
And in the Taiwan Strait, China now holds strategic dominance, the U.S. can’t play that card forever.
Why this matters?
This marks a shift from defence to offence in the global tech standoff.
China knows that without its rare earths, the West’s advanced manufacturing stalls.
Tesla’s humanoid robot delays and Ford’s factory shutdowns earlier this year already proved the point.
The U.S. can restrict chips all it wants, but no chips, drones, missiles, or EVs work without China’s minerals.
The bigger picture:
We’re watching economic bifurcation unfold.
China localising its supply chains, while the West scrambles to rebuild what it once outsourced.
Seven years ago, Washington had leverage.
Today, that balance has flipped.
The era of U.S. pressure and Chinese compliance?
Over.