How China’s new rare-earth export controls target the Pentagon—and the world

Global markets received an unwelcome jolt in April when the Chinese government began to require pre-approval for exports of medium and heavy rare-earth elements. Official statements and state-linked commentators have since made clear that this new export-license system is designed to increase Beijing’s leverage over Pentagon supply chains. It may, in fact, become a signature tool of great power competition.

The Ministry of Commerce laid out the basics in Announcement No. 18: Chinese exporters must now obtain licenses to ship out certain rare earth metals (and their oxides, alloys, and compounds) such as dysprosium, terbium, samarium, gadolinium, lutetium, scandium, and yttrium. The effects have been quick and drastic. In May, Chinese exports of certain related products, such as rare-earth magnets used in technologies from jet fighters to electric vehicles, plummeted by 74 percent compared to the year earlier. This has moved the issue to “center stage in tensions with the U.S.,” as the Wall Street Journal put it.

China’s new rare-earth policy marks a strategic pivot from its earlier quota-based restrictions, which were often justified on environmental grounds. In 2010, Beijing slashed export quotas by 40 percent, citing the need to “curtail pollution and preserve resources” even as prices soared. Other countries complained to the WTO, which in 2014 ruled against China.

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