In the ongoing trade dispute, China has often painted itself as a victim, a rising global power striving to stabilize the world economy against what it characterizes as unfair tariffs and technological restrictions imposed by the United States.
However, this self-portrayal is becoming increasingly difficult to reconcile with recent actions that reveal China as an industrial powerhouse, poised to wield its considerable influence over rare earth minerals—essential for modern manufacturing—against any nation or corporation that might obstruct its path.
Globally, China dominates the mining and processing of rare earths, which are indispensable for technologies ranging from computer chips and electric vehicles to advanced fighter jets. In a direct response to former President Trump’s tariffs and technology bans, Beijing has implemented a new regulatory framework designed to control the flow of a vast array of tech products that rely on even minute quantities of Chinese rare earths.
This strategic maneuver provides Beijing with significant bargaining power ahead of an upcoming meeting between its leader, Xi Jinping, and former President Trump. It serves as a stark reminder to Washington that China’s control over these vital minerals can dictate the conditions of any potential trade resolution.
Despite the immediate leverage, this aggressive display of economic power might prove counterproductive for Beijing. For years, China has criticized American export controls, yet now it appears to be adopting similar tactics. By demonstrating a readiness to restrict rare earth access to favored nations, China risks being perceived as the very ‘irresponsible hegemon’ it frequently accuses the United States of being.
Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis, commented on China’s precarious position, stating that “China’s walking a fine line here between strengthening its position in U.S.-China trade negotiations and scaring the rest of the world about its export control intentions.”
China has consistently urged Washington to lift its restrictions on advanced semiconductor chip exports, reduce tariffs, and ease limitations on Chinese investments in the U.S. In retaliation, former President Trump has countered with threats of a staggering 100 percent tariff increase on Chinese goods and further export controls on American software.
Analysts suggest that both nations might seek to stabilize their strained relationship by agreeing to suspend their most severe punitive actions. This could involve a temporary halt on U.S. tariffs and tech restrictions, alongside a postponement of China’s rare earths controls.
Starting in December, China’s new regulations will mandate that global exporters seek Beijing’s approval to sell any products or components containing Chinese rare earths, or those manufactured using Chinese rare-earths-related equipment. This effectively extends China’s reach across international supply chains.
While Chinese officials assert these rules are designed to prevent their rare earths from contributing to weapons development, critics argue they grant Beijing the power to selectively control supply for political leverage.
Wu Xinbo, dean of the Institute of International Studies at Fudan University in Shanghai, noted that “If bilateral relations are bad or not good, then it may take a long time to handle the applications for export. Or even in some cases, applications may be rejected.”
Furthermore, China argues that it is simply emulating the extraterritorial export controls initially enforced by the United States, such as those that restricted technology access for the Chinese tech giant, Huawei.
As Mr. Wu put it, “We basically followed the precedent set up by the U.S. and its allies a long time ago, so if you want to say this is coercive, fine, you know, we just learned from you, right?”
However, this overt use of coercion, likened by some analysts to former President Trump’s “Liberation Day” tariffs due to its broad and unilateral nature, could undermine China’s attempts to present itself as a dependable trading partner, a champion of globalization, and a credible alternative to the United States in global leadership.
In response to mounting international criticism, Chinese officials have sought to de-emphasize the new measures, insisting they are not outright export bans.
During a recent meeting with over 170 foreign companies and business associations, China’s Vice Commerce Minister Ling Ji attempted to reassure them, stating that China would continue to approve “legitimate” transactions and ensure a stable supply of rare earths.
Nonetheless, experts believe China is unlikely to reverse these measures, noting that Chinese officials have been systematically developing export controls as a strategic tool since 2017.
Rush Doshi, a former Biden administration official and author, ominously remarked that “The gun is loaded, and they’ve demonstrated their intention to pull the trigger at some point.”
He further speculated that “the question now is only what issue they’ll pull the trigger on,” suggesting Beijing would likely first leverage these controls in economic negotiations, and later for broader geopolitical objectives, such as its claims over Taiwan.
Domestically, the new system has fostered a sense of national pride, with Chinese state media and commentators celebrating the country’s evolution from a mere supplier of rare earths to a global leader dictating the terms of their supply.
Xu Hongcai, deputy director of the economic policy committee of the China Association of Policy Sciences, observed, “The U.S. is used to making moves and others following. Now that China is taking the initiative, they are a bit passive, uncomfortable, surprised and even shocked that China could be like this.”
While China has a history of economic coercion, including restricting rare earth shipments to Japan in 2010, experts consider these latest measures to be its most assertive to date.
By implementing these rules globally, rather than just targeting the United States, China’s objective may be to discourage other nations from pursuing ‘de-risking’ strategies aimed at reducing their dependence on Chinese supply chains.
Emily Kilcrease, a senior fellow at the Center for a New American Security, suggested, “They knew they were going to get some blowback, but they thought it was important to show strength and to show the flex here, to show anyone who might be thinking about aligning with the U.S., or pursuing their own de-risking agenda, that that’s not going to be cost-less for them.”
However, these actions may be inadvertently achieving the opposite outcome.
The European Union’s trade chief, Maros Sefcovic, conveyed to Chinese Commerce Minister Wang Wentao that Beijing’s new rare earths policies “cast a shadow over our relationship.” Meanwhile, officials from the Group of 7 nations (Britain, Canada, France, Germany, Italy, Japan, and the United States) are reportedly contemplating a unified response.
Treasury Secretary Scott Bessent announced that the United States is considering imposing restrictions on software exports to China, in direct retaliation for the rare earths policies. This move, he indicated, would be coordinated with other G7 member states.
Kyle Chan, a researcher at the RAND Corporation specializing in China’s industrial policy, observed, “This time around you see that it’s not just the U.S. complaining. It was many countries that felt like this is not only destabilizing for them, but it’s seen almost as an aggressive act.”