From The Diplomat, November 8:
The pause on expert restrictions was neither the U.S. victory Trump proclaimed it to be nor the act of a supremely confident, unassailable China.
When U.S. President Donald Trump emerged from his October summit with Chinese President Xi Jinping in Busan, South Korea, he declared it a “12 out of 10” success. Washington, it seemed, had won a major concession. In exchange for tariff relief, Beijing agreed to pause its escalating export controls on rare earth elements for one year, granting U.S. industry a vital reprieve.
This interpretation is dangerously wrong. It mistakes a tactical maneuver for a strategic retreat. Chinese-language analysis of the summit reveals a different story: one of strategic patience from a power that understands both its structural dominance and its acute vulnerabilities. Beijing’s move was not a concession but a calculated exercise of power – a strategic pause that maintains leverage while managing vulnerabilities.
Beijing’s confidence rests on a fundamental asymmetry in 21st century great power competition. U.S. chokepoints, built on high technology, are proving fragile. China’s chokepoints, built on grubby industrial processes, are proving extraordinarily durable.
The asymmetry of time favors China: building a single integrated mine-to-magnet supply chain takes 10 to 15 years. This explains why, 15 years after China’s 2010 rare earth embargo against Japan, Western dependence has barely budged. Meanwhile advanced semiconductor technologies become obsolete far faster – and China has already found “good enough” substitutes.
The Industrial Fortress
China’s dominance is not a simple accident of geology. It is an industrial fortress, built over 40 years with patient capital and a willingness to bear environmental and social costs no Western democracy will tolerate. This fortress is secured by three mutually reinforcing locks.
First: The Resource Lock. The public debate conflates all 17 rare earth elements as equivalent. This is fundamentally wrong. The real bottleneck is not in light rare earths, which the United States, Australia, and other nations possess in abundance. The chokepoint lies in heavy rare earth elements (HREEs) – specifically dysprosium and terbium – indispensable additives for high-performance magnets in F-35 fighter jets and electric vehicle motors that must function at extreme temperatures.
China’s ion-adsorption clay deposits dominate because they are the world’s most economical HREE source. These clays allow simple, low-cost extraction through ion-exchange leaching at ambient temperatures – a stark contrast to hard-rock HREE deposits like Strange Lake (Canada), Norra Kärr (Sweden), and Browns Range (Australia). These hard-rock deposits require aggressive acid digestion, complex multistage hydrometallurgy, and far higher capital and operating costs – making them economically uncompetitive against China’s clay advantage.
This lock is further secured by a gray-zone supply chain from the Kachin region of northern Myanmar, which provides approximately half China’s heavy rare earth inputs. China, thus, controls approximately 90 percent of global heavy rare earth production and 99 percent processing capacity.
Second: The Technology Lock. Possessing the ore is useless without the ability to process it. The rare earth elements are chemically similar and extremely difficult to separate. This is China’s technical black box. Through decades of state-funded R&D, China mastered the complex solvent extraction process.
This is not cutting-edge physics; it is 1980s chemistry. But it represents a technical learning curve measured in decades, embodied in the process know-how of tens of thousands of experienced engineers – expertise that the West, with only a handful of seasoned experts, lacks.
China has now banned the export of this processing technology and restricted talent mobility, locking the box from the outside.
Third: The Ecosystem Lock. China has constructed the world’s most complete rare earth industrial chain, from mine to magnet. Critically, it is also the world’s largest consumer of rare earths, accounting for approximately 70 percent of global demand. Its massive internal demand from its globally dominant EV and wind turbine sectors creates economies of scale that make any new Western competitor economically irrational from the start.
This dominance has been purposefully consolidated through a deliberate, four-phase state strategy that culminated in 2021 with the merger of the six major groups into two super-giants: Northern Rare Earth (controlling light rare earths) and China Rare Earth Group (controlling heavy rare earths). This move solidified state control and global pricing power.
China’s Two-Stage Weapon
China is now leveraging this power through a strategy decades in the making. The 2010 embargo against Japan over the Senkaku/Diaoyu islands dispute was a clear test of this leverage. When the World Trade Organization struck down China’s crude export quotas in 2014, Beijing simply pivoted to a more sophisticated approach: consolidating its scattered, low-cost but highly polluting industry into state-run giants to control output and exports.
This new legal framework – principally the 2020 Export Control Law and the 2024 Regulations on the Export Control of Dual-Use Items – enhanced central control and established political legitimacy for actions Beijing previously took informally. The 2025 export controls were the first major deployment of this weaponized legal arsenal, unfolding in two distinct stages.
In stage 1, Beijing placed seven key medium-heavy rare earths and their derivative products under a strict export licensing regime announced on April 4. The case-by-case licensing process, administered by the Ministry of Commerce, caused immediate procedural delays and disrupted global supply chains, forcing auto manufacturers in the U.S., Europe, and Japan to suspend production....
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