China’s Rare Earths Dominance Gives it Control over Global Industry

BEIJING, Oct. 20, 2025 — Over three decades, China turned a modest mining industry into a global power base. In the early 1990s, the United States and Australia led rare earth production, but China moved differently. It poured investment into exploration, offered cheap financing, and tolerated heavy pollution to outprice competitors. The result was dominance not by chance but by design.

Chinese companies built refining plants, invested abroad, and secured exclusive supply contracts. The outcome today is overwhelming. China processes more than 80 percent of the world’s rare earths and supplies most of the magnets that power electric vehicles, wind turbines, and advanced weapons. What began as an industrial plan evolved into a pillar of national strategy.

The Strategic Leverage of Rare Earths

Rare earths are the hidden enablers of modern technology. They strengthen magnets, improve battery life, and make radar systems precise. Control over them means control over progress. When one nation commands every major step of production, it holds an influence that reaches beyond trade.

China’s restrictions on exports have shown how such control can shape global behavior. Companies hesitate to challenge Beijing because they cannot risk being cut off. A single policy change in Beijing can ripple through global supply chains, unsettle markets, and force industries to scramble for alternatives. The world is learning that efficiency without security is a dangerous mix.

Can Other Countries Break Free?

The race to loosen dependence has begun, but it faces serious limits.

Mining matters but processing counts more: Finding new deposits is not the hardest part. The real choke point lies in refining, separating, and transforming the raw material into high performance magnets. China mastered that stage years ago while other nations focused on extraction. Mining projects alone will not solve the problem because raw ore is worthless without the capacity to process it at scale.

Investment and industrial policy required: Western countries talk about diversification, but building a full supply chain takes decades and sustained policy backing. That means funding refineries, training specialists, and creating stable demand so private capital can follow. Without that, the same pattern will repeat. Ores may be dug elsewhere, yet most of the value will still flow through Chinese factories.

This challenge tests not only economics but political will. The question is not simply whether others can compete. It is whether they are prepared to think and act for the long term.

Why the Shift to China Should Worry Industry and Investors

Global manufacturers now live with a new form of risk. Access to essential materials can change with politics. A factory line in Europe or the United States can stall because an export license was withheld thousands of miles away. China is tightening rules on rare earth trade, controlling who can mine, refine, or ship these materials. Each measure deepens its influence over pricing and availability.

Such dominance changes how markets behave. Prices no longer follow pure supply and demand. They follow decisions made inside one government. Investors must now evaluate exposure not just to market trends but to geopolitical choices. Manufacturers must rethink supply security as part of their core strategy rather than an afterthought.

The reliance on China is not accidental. It is the result of decades of deliberate industrial policy that rewarded persistence and punished short-term thinking elsewhere. Those who ignored the warning signs are now confronting them in real time.

When China tightened export controls this month it reminded the world how much it depends on one supplier and how little control it really has.

Inputs from Diana Chou

Editing by David Ryder