China just turned rare-earths into a geopolitical weapon, yet savvy investors know the real profits lie in non-China producers and processors.
Beijing dropped new export controls on rare-earth materials this Thursday, a calculated strike timed weeks before President Trump and Xi Jinping meet in South Korea. Foreign companies now need Beijing’s stamp of approval before exporting magnets with even trace amounts of Chinese-sourced rare earths or technology.
The rules give Beijing its own version of Washington’s foreign-direct-product rule, the tool the U.S. has wielded to cut off China’s semiconductor access. China controls roughly 70% of global rare-earth mining, 90% of separation and processing, and 93% of magnet manufacturing. That dominance puts Beijing in command of supply chains running through smartphones, electric vehicles, and fighter jets.
Investors saw opportunity fast. State-owned surged 10% in Shanghai on the news. Rising Nonferrous Metals jumped more than 6%. The Chinese stock rally matters less than the bigger picture: building supply chains outside China just became urgent, and certain companies are positioned to capture billions in that transition.
The Strategic Backdrop
This policy shift doubles as negotiation leverage ahead of Washington talks. Rare-earth shortages have already hit U.S. auto supply chains and triggered multiple rounds of tense discussions. Beijing tightened access to materials that defense contractors and tech manufacturers depend on, a reminder that Chinese processing capabilities still dominate global supply.
The commerce ministry called the controls necessary to
China Tightens Grip on Rare Earths: Here Are Mining Stocks That Could Explode
