Strategic Resource Control: A Multifaceted Approach

In a move signaling escalating trade tensions, China is intensifying its efforts to control the export of core minerals vital to global industries, notably those with applications in the U.S.defense sector. Recent reports highlight a nationwide crackdown on smuggling, aimed at preventing the illegal outflow of strategic resources.

Heightened Scrutiny and Inter-Agency Cooperation

A high-level meeting on September 9th, involving key officials from the Ministry of Commerce, Public Security, Customs, and the Supreme Peopel’s Court, underscored the government’s commitment to safeguarding resources deemed critical for national security and economic advancement.State media reports indicate that discussions centered on preventing illicit activities designed to circumvent existing export controls on minerals like gallium, germanium, antimony, and tungsten.

The authorities emphasized the urgency of these crackdowns, stating that they are essential to prevent strategic resources from leaking overseas and to maintain the stability of the industrial supply chain.

Impact on Exports and Global Supply Chains

The impact of these measures is already being felt. Data from the first quarter of 2025 reveals important declines in exports of key minerals. For example, antimony exports have reportedly plummeted by 57%, while germanium exports have decreased by 39%. These restrictions, initially imposed last year on antimony, gallium, and germanium, and later expanded to include tungsten and other metals used in ammunition manufacturing, require exporters to obtain licenses for restricted items.

According to Lajibbis Was, a researcher at a Singapore-based research firm, We are aiming to strengthen our recent restrictions on various core minerals essential for the US defense industry.

Transshipment Concerns and Regional Collaboration

Recognizing the potential for circumvention, Chinese authorities are focusing on illegal practices such as transshipment through third countries. This concern mirrors similar challenges faced by the U.S.and the European Union in enforcing sanctions against russia, where companies have exploited transshipment loopholes. To address this, the government is emphasizing closer cooperation between regions, including enhanced customs management in Hong Kong and Macau.

The Quest for Alternatives: Ukraine’s Role

Amidst these developments, there are attempts to diversify supply chains and reduce reliance on China. For instance, discussions have taken place regarding core mineral transactions with Ukraine. Though, experts remain skeptical about Ukraine’s capacity to fully replace China as a major supplier.

China’s Dominance in Rare Earth Elements

China’s dominance in the rare earth elements market is a crucial factor in this global dynamic.The nation holds approximately 60% of the world’s rare earth reserves and accounts for around 90% of total production. According to the U.S. Geological Survey (USGS), China produced 270,000 tons of rare earths last year.

Liang Economics, a professor of economics at willramit University, USA, notes that The scale is not comparable. We do not have tens of billions of dollars of mineral reserves,and not only mineral reserves but also processing skills are important.

Geopolitical Implications and Future Outlook

China’s actions are widely seen as a strategic maneuver to gain leverage in ongoing trade disputes with the United States while maintaining control over vital resources. This approach reflects a broader trend of nations leveraging their resource wealth to advance geopolitical and economic interests.

John Haikawi, president of Toronto-based industrial advisory company Storm Crow Capital, suggests that China will not need the US market in the end.