How China Turned Rare-Earth Dominance into a Strategic Lever

Since the 1980s, China grew from a cheap, polluting exporter of rare-earth elements to the world’s primary processor, controlling roughly 85 % of global output and holding the largest known deposits. Early lax regulations encouraged rapid growth, but environmental damage and price wars led the central government to impose export taxes, quotas, and later a strategic reserve. Incidents such as the 2010 temporary halt of shipments to Japan and recent U.S. chip export restrictions triggered reciprocal licensing rules, turning the market into a bargaining chip for both sides.

Analysts argue that this weaponisation is less a long-term master plan than a reactionary escalation between two powers each seeking security. While the United States and allies are investing in alternative mines and recycling, estimates suggest that fully removing China from supply chains would cost trillions, underscoring the limits of leverage and the need for managed interdependence.