Beijing’s latest export restrictions on rare-earth extraction technologies have jolted the global minerals market, signaling a new phase in the geopolitical contest over critical resources that underpin modern defense and green technologies. The move comes after Chinese authorities learned that Pakistan—long regarded as China’s closest strategic partner—has been using Chinese equipment to produce niche metals for U.S. industries, including the defense sector.
On Thursday, China’s Ministry of Commerce unveiled a sweeping set of new rules tightening export controls on rare-earth production, processing, and separation equipment. The measures, which take effect November 8, mandate that overseas producers of rare earths must apply for licenses before obtaining any Chinese extraction technologies or related machinery.
The rules are part of a broader campaign to secure control over strategic materials—resources essential to semiconductors, electric vehicles, renewable energy systems, and advanced weaponry. On the same day, China’s Commerce Ministry and Customs Administration jointly issued four complementary documents extending export controls across multiple critical material categories.
- Synthetic diamonds—including powders, single crystals, and diamond wire saws—have been added to the export control list.
- Licensing systems will now govern exports of rare-earth separation and extraction technologies.
- Exports of certain middle and heavy rare-earth metals, alloys, oxides, and compounds will be prohibited.
- Restrictions will also apply to lithium-battery components and artificial graphite materials.
- Exporters must now classify products based on dual-use potential and provide detailed technical parameters if they approach control thresholds.
The timing of the announcement is deliberate: the controls will come into force just two days before November 10, when the current U.S.–China trade truce expires—adding pressure ahead of potential negotiations.
The move follows growing unease in Beijing over reports that Pakistan, a long-time Chinese ally, has begun supplying rare earths to the United States using Chinese-made equipment. In September, Islamabad signed a memorandum of understanding with U.S. company Strategic Metals Inc. to produce critical minerals in Pakistan, with initial investments worth approximately US$500 million.
According to Pakistan’s prime minister’s office, the first phase of the project targets the extraction and export of rare earth elements crucial for the production of fighter jets, missiles, and electric vehicles. Sources within Pakistan’s mining sector confirm that a pilot shipment of rare earth materials has already reached U.S. buyers—an act seen by many in Beijing as a breach of trust.
The deal thrusts Pakistan into the heart of the escalating resource rivalry between the world’s two largest economies. For decades, China and Pakistan have presented themselves as “iron brothers,” their partnership symbolized through massive infrastructure collaboration under the China–Pakistan Economic Corridor (CPEC), a flagship project of Beijing’s Belt and Road Initiative (BRI).
But Islamabad’s decision to open its mineral reserves to U.S. investors—using Chinese equipment—has stirred discomfort in Beijing, where policymakers view rare-earth technology as a pillar of national power.
“Pakistan’s five million metric tons of rare earths reserves, worth several trillion dollars, have suddenly become a new focal point in the strategic rivalry between China and the U.S.,” wrote a Shandong-based columnist in Economic Observer. “American defense contractors urgently need these rare earths to sustain production of F-35 fighter jets and nuclear submarines. Meanwhile, China, with 92% of the world’s rare-earth refining capacity, retains control of the key extraction and purification technologies.”
China’s dominance over the rare-earth supply chain has long been one of its strongest strategic levers. The country controls over 60% of global rare earth production, about 70% of lithium refining, nearly 70% of cobalt processing, and more than 90% of battery-grade graphite output. These advantages stem from decades of coordinated state investment, technological advancement, and environmental sacrifices few other nations were willing to make.
This dominance allows Beijing to influence the global availability and pricing of materials essential to technologies ranging from smartphones to missiles. Rare earths—17 chemically similar elements like neodymium, dysprosium, and terbium—are indispensable for producing high-performance magnets, advanced optics, and clean-energy systems.
However, Beijing’s leverage weakens if other nations—particularly U.S. allies—can replicate or access China’s separation technologies. This is why Pakistan’s U.S.-backed rare-earth initiative struck a nerve: it hints at an emerging pathway for the United States to bypass China’s chokehold.
A Shanghai-based financial analyst writing on WeChat described Pakistan’s move as “a double-edged sword.”
“Pakistan may have earned quick money by accepting U.S. investment,” he noted, “but whether this short-term gain will become a long-term benefit remains uncertain. It will not be easy for Pakistan to strike a political balance between China and the U.S. Any misstep could be costly.”
He added a pointed reminder: “As long as Pakistan avoids actions that hurt China’s core interests, the foundation of China–Pakistan friendship will remain strong. Pakistan needs to remember who its true brother is.”
Technology: The Real Prize
While rare-earth ores are found in many parts of the world—from Australia to Greenland—the true challenge lies in separating and refining these elements into high-purity materials suitable for industrial or military applications.
“Mining rare earths is the easy part,” says Dr. Zhang Wei, a materials scientist at Tsinghua University. “The hard part is turning those rocks into something useful.”
Chinese mastery of extraction and purification techniques gives it an enduring advantage. These processes rely heavily on solvent extraction and ion exchange, which exploit minute chemical differences to isolate individual elements. In solvent extraction, organic liquids pull specific rare earths from an aqueous solution, while ion exchange uses resin columns to separate ions with near-identical properties.
Because rare earths often occur together in complex ores, achieving purity levels above 99.9%—required for military-grade magnets—demands hundreds of separation stages. It’s a laborious, chemically intensive process, and much of the expertise is locked inside Chinese state labs and universities.
One of the pioneers of these techniques was Xu Guangxian (1920–2015), a chemist revered as the “Father of China’s Rare Earths.” Xu developed a countercurrent extraction method in the 1970s that successfully separated praseodymium and neodymium—elements crucial for high-performance magnets.
At the time, China was emerging from the turmoil of the Cultural Revolution, yet Xu’s achievement marked a turning point in the nation’s scientific self-sufficiency. His methods remain foundational to China’s refining industry today.
The new export controls are expected to ripple through industries worldwide. Companies reliant on Chinese separation equipment—particularly in Southeast Asia and Africa—may find their operations stalled.
Analysts at Benchmark Mineral Intelligence predict “significant bottlenecks” for projects in emerging rare-earth hubs like Vietnam and Tanzania, which depend on Chinese technology for pilot-scale separation facilities.
Meanwhile, Western nations racing to diversify supply chains could face higher costs and longer timelines. The U.S. has invested heavily in domestic rare-earth initiatives, including MP Materials’ processing facility in California and Lynas Rare Earths’ expansion in Texas, but both still rely on Chinese know-how for certain refining steps.
“This is China drawing a red line around its intellectual property,” says Jennifer Harris, a former White House economic advisor. “It’s a reminder that while you can mine rare earths anywhere, refining them to usable standards is still largely a Chinese game.”
Beijing’s move fits a broader pattern of resource nationalism that has defined global politics in the past decade. As clean-energy transitions accelerate, the minerals underpinning them—lithium, cobalt, nickel, and rare earths—have become tools of power as much as commodities.
China’s approach is pragmatic but assertive: to secure upstream resources while controlling midstream processing. Through initiatives like the Belt and Road, it has financed mines in Africa and South America while anchoring refining and manufacturing at home.
The West, once complacent about mineral supply chains, is now scrambling to catch up. The U.S. Inflation Reduction Act and the EU Critical Raw Materials Act aim to localize production, but technological gaps remain formidable.
In this context, Pakistan’s decision to align partially with U.S. interests is more than an economic move—it’s a geopolitical statement. The U.S. is attempting to build an alternative critical-minerals alliance that includes partners like Australia, Canada, and India. By joining this effort, Pakistan could gain investment and leverage—but at the potential cost of alienating Beijing.
Pakistan sits at the crossroads of competing strategic agendas. Economically fragile and burdened by debt, it sees in its mineral wealth a path to revival. Estimates suggest its rare-earth reserves could exceed five million metric tons—among the world’s largest untapped deposits.
For Islamabad, attracting U.S. capital offers diversification away from dependence on Chinese financing, particularly as CPEC faces delays and rising scrutiny. Yet the decision risks upsetting the delicate balance of Pakistan’s foreign policy.
“Pakistan’s challenge is walking a tightrope,” says Dr. Ayesha Khan, a political economist at Lahore University. “It cannot afford to lose Chinese investment, but it also cannot ignore the economic and diplomatic opportunities of engaging the U.S.”
Publicly, Pakistan’s officials have downplayed any tensions. “Our cooperation with the U.S. in minerals does not affect our brotherly relations with China,” said Pakistan’s Minister for Industries, Rana Tanveer Hussain, in a recent press briefing. But in Beijing, state media commentaries have been less forgiving, framing the partnership as a “betrayal of trust” and warning against “foreign manipulation.”
The timing of China’s export control announcement is no coincidence. It comes just weeks before the APEC Summit in South Korea, where Presidents Xi Jinping and Donald Trump are expected to meet for the first time in over a year.
By unveiling the restrictions now, Beijing is sending a calculated signal: it will not tolerate actions that undermine its control over critical technologies, especially when those technologies are used to support U.S. defense industries.
“Beijing is drawing a line between friendship and strategic dependency,” says Wu Shixiong, a researcher at the Chinese Academy of International Trade. “Pakistan may remain a friend, but friends should not arm your rival.”
The controls also serve as leverage in negotiations. With the trade truce expiring on November 10, China’s tightening of export policies adds a new bargaining chip to its arsenal, potentially compelling Washington to approach talks with greater caution.
Observers note echoes of past resource confrontations. In 2010, Beijing briefly halted rare-earth exports to Japan after a territorial dispute, sending global prices soaring and prompting nations to seek alternative sources.
Today’s restrictions are more sophisticated, targeting the technology rather than the minerals themselves—a reflection of China’s maturation from raw-material supplier to technology gatekeeper.
“By restricting machinery and know-how, China ensures that even if others mine rare earths, they remain dependent on Chinese expertise,” says consultant Andrew McCarthy of Eurasia Group. “It’s a move from resource control to knowledge control.”
Beyond geopolitics, the rare-earth industry raises profound environmental and ethical concerns. Processing these minerals generates large volumes of toxic waste and radioactive byproducts. China has long borne the environmental costs of global technological progress, with rare-earth hubs like Baotou in Inner Mongolia suffering severe pollution.
Beijing’s new export controls could therefore serve dual purposes: protecting its technological edge and tightening environmental oversight by curbing unauthorized or low-efficiency exports.
However, critics argue that China’s environmental justifications often mask strategic calculations. “It’s about control, not conservation,” says a European diplomat in Beijing. “China knows exactly how central these materials are to the future of both green tech and military systems.”
The markets have already reacted. Shares of rare-earth miners in Australia and Canada spiked within hours of the announcement. Meanwhile, Chinese producers saw gains amid expectations of tighter supply and higher prices.
U.S. defense contractors are reportedly assessing potential disruptions. A senior Pentagon official, speaking anonymously, said Washington had “anticipated” the move but acknowledged it could complicate procurement timelines for certain components.
“We’ve seen this play before,” the official said. “The difference now is that the world is even more dependent on China than it was ten years ago.”
As November 8 approaches, governments and corporations are bracing for a new phase in the global resource contest. Beijing’s message is clear: access to its rare-earth technology will be conditional on political alignment and strategic discretion.
For Pakistan, the stakes are particularly high. The country must navigate between two superpowers—one that offers capital and another that holds the keys to the technology it needs.
For the United States, the episode underscores the fragility of its supply chains and the urgency of building domestic and allied alternatives.
