China's Rare Earth Gambit Is This a Trade War Power Play?

China Walks a Line in U.S. Trade Talks, Trying Not to Overplay Its Hand

China's role in the global rare earth market remains a delicate balancing act, particularly as trade talks with the U.S. continue. Recent developments suggest a calculated approach, aiming to maintain dominance without triggering further tensions.

On Wednesday, JL Mag Rare-Earth Company, a prominent magnet producer based in Ganzhou, made a public announcement. The company stated it had received licenses from China’s Ministry of Commerce to export nonmilitary magnets to the United States, Europe, and Southeast Asia. This move highlights China's continued presence in these key markets.

Historically, China has strategically employed governmental policies to influence global markets, often saturating them with inexpensive Chinese goods. This practice has, unfortunately, led to the demise of numerous rare earth competitors outside of China.

Xiao Yaqing, a significant figure in Chinese industrial policy and former minister of industry and information technology, emphasized China’s position in 2021. He stated, "China is a major rare earth country with the largest amount of resources and the largest exports." He also refuted claims of export restrictions, noting, "Some countries say that we restrict exports — most of what you buy comes from China."

However, by 2021, China had already solidified its control over the global rare earth market. This dominance raises concerns about dependence and supply chain vulnerabilities for other nations.

Key takeaways regarding China's rare earth strategy:

• Strategic Export Licenses: Granting export licenses to companies like JL Mag ensures a continued flow of rare earth products to vital markets.
• Market Influence: China leverages its government policies to exert control over rare earth pricing and availability.
• Global Dominance: China's significant resources and exports have made it the leading player in the rare earth industry.

According to Jim Hedrick, a former rare earths specialist at the United States Geological Survey and current president of U.S. Critical Materials, it would take considerable time and effort for the United States to lessen its reliance on China for rare earths. Hedrick estimates that even with a concerted effort, achieving independence could take as long as five years.

Breaking down the challenge of U.S. independence:

1. Resource Diversification: Identifying and developing alternative rare earth sources.
2. Infrastructure Investment: Building processing and manufacturing facilities within the U.S.
3. Strategic Partnerships: Collaborating with other countries to secure a stable supply chain.

China's approach to rare earth exports reflects a careful balancing act. While aiming to maintain its market share, it also appears cautious not to escalate trade tensions with the U.S. The coming months will be crucial in observing how this strategy unfolds and its impact on the global rare earth landscape. Navigating this complex terrain requires vigilance and strategic planning from all stakeholders.

Source: https://www.nytimes.com/2025/06/11/business/china-rare-earths.html