DISPATCHES OF THE SECOND COLD WAR OBSERVATORY 

CHINA'S LONG MARCH TOWARD RARE EARTH WEAPONIZATION 

 Jessica DiCARLO, Cory COMBS, Raphael DEBERDT
15 September 2026

 
*This SCWO Dispatch is an extended version of an East Asia Forum essay, "Local politics limits China’s rare earth leverage," and is based on this article in The China Quarterly. 

China’s export controls on rare earth elements (REE) have reinforced a familiar narrative: Beijing can weaponise certain supply chains whenever geopolitical tensions rise. From Washington to Tokyo to Brussels, China’s dominance in rare earth mining, processing, and magnet production is often taken as evidence that it can simply turn supply on and off. Recent export restrictions to the United States (US) and tighter controls affecting Japan have only strengthened the perception of a state capable of weaponising supply chains at will. 

Yet, industrial dominance is not the same as geopolitical leverage, and resource power is not produced by the control of mines, processing plants, or exports alone. It depends on a state’s ability to coordinate firms, regulators, subnational governments, and local authorities to implement decisions that make controls work in practice. Understanding the weaponisation of critical minerals then requires assessing what conditions help or hinder implementation. 

Implementation is difficult because REE systems cannot be understood as simply managed by “China” in the abstract. Minerals are extracted, transformed, and exported through a dense network of actors whose interests only sometimes align. The key is to look beyond China’s market dominance to the politics of production itself. We describe China’s REE sector as governed through fractured extraction, a system neither fully centralised nor fragmented, but characterised by continual bargaining between central ministries, provincial governments, municipalities, and firms. This extends from extraction through the midstream to the downstream. Understanding these actors’ negotiations and internal dynamics helps explain both the strengths and limits of China’s strategic advantage and the central government’s ability to weaponise it. The geopolitical utility of REEs then depends on the state’s ability to continually coordinate actors that have historically pursued their own developmental or commercial goals. 

REEs have become an archetypal example of resource securitisation. Beijing’s objectives extend well beyond resource extraction to encompass technological self-sufficiency, advanced manufacturing, and geopolitical leverage. The country unquestionably possesses extraordinary advantages in REEs, a product of sustained state intervention. They were built over decades through industrial policy, very long-term investment, and, not least, decisions by Western economies to offshore low-margin, environmentally destructive production. However, developing industrial capacity is not the same as mobilising it for geopolitical purposes. The more Beijing relies on REEs as a form of leverage, the more it depends on cooperation from domestic actors and processes it does not fully control. Every new licensing regime, export restriction, or anti-smuggling campaign increases the importance of local cooperation and implementation. The ability to weaponise supplies, then, depends on far more than resource abundance or industrial dominance, and is shaped as much by domestic governance as by international rivalry. 

REE production is especially complex. Various Chinese entities extract and refine all naturally occurring REEs. However, the elements occur together in commercially unbalanced concentrations, forcing overproduction of some (like cerium) just to achieve adequate supply of others (like neodymium). Meanwhile, after batch extraction, the unequally supplied ores are then chemically separated and refined, before further processing into oxides and then other products – from magnets to medical imaging systems, semiconductor production inputs, and F-35 fighter jet stealth coatings. Actors at different stages of production often have competing interests in how each stage is governed. Local governments, whose economies depend on different actors and companies for GDP, tax revenues, and employment, typically champion these interests in addition to mandates handed down from Beijing.

These tensions have deep historical roots. For much of China’s reform era, local governments were broadly encouraged to maximise GDP, investment, and revenue. These priorities helped drive natural resource extraction and processing, including of REEs. They also entrenched incentives that proved difficult to reverse, such as overproduction, smuggling, and serious environmental degradation. Over the past two decades, central authorities have struggled to consolidate production, curb illegal mining, strengthen environmental regulation, and push the industry toward higher-value manufacturing. However, implementation has struggled due to mismatched incentives. Provincial and municipal governments remain invested in mining revenues, employment, and industrial upgrading. Provinces rich in REEs often continue to prioritise investment and expansion even when doing so complicates national objectives to restrict production, raise environmental standards, or expand the sector. Municipal leaders are often evaluated on economic growth and fiscal performance. Firms pursue profitability and market share. These priorities frequently sit uneasily alongside Beijing’s ambitions for sector-wide consolidation or environmental reform.

Consider, for example, Beijing’s export controls and licensing regimes implemented since 2025. They are often interpreted as evidence of overwhelming state power, yet such controls depend on compliance across a range of highly decentralised production and regulatory regimes. Central ministries, customs authorities, provincial governments, municipal officials, and firms all become part of the architecture through which geopolitical objectives are either realised or undermined. In many ways, one of Beijing’s greatest challenges may not be external pressure from capitals like Washington or Brussels, but rather the management of persistent tensions embedded within its own system of resource governance.

Successive rounds of reforms have not eliminated these tensions. If anything, they reveal how much institutional effort is required to manage them. Although consolidation promises greater oversight, stronger bargaining power, and tighter control over exports, it is not simply evidence of an all-powerful central state. Rather, it is evidence of the substantial institutional effort required to produce it and overcome longstanding coordination problems. Provincial governments and firms still compete for investment, tax revenue, and opportunities for industrial upgrading. When environmental degradation, illegal mining, or excessive competition threaten national priorities, Beijing tightens oversight. But local subnational and corporate actors do not simply comply. Local governments and firms adapt, reinterpret regulations, negotiate exemptions, seek new processing facilities, establish research centers, or pursue manufacturing investments that preserve local growth. They continually reposition themselves on the complex map of China’s evolving geography of industrial power.

China’s experience offers lessons for broader critical minerals governance. Governments attempting to build domestic critical mineral industries increasingly confront similar challenges, such as how to reconcile national security with commercial viability, environmental regulation, subnational politics, and local perspectives and engagement. Though institutional and political contexts differ, remarkably familiar governance challenges emerge. 

Current debates from Washington to Brussels often assume that dependence on China can be addressed through onshoring, reshoring, or friendshoring. Build more mines. Expand processing facilities. Develop allied supply chains. But these efforts do not remove the politics of implementation. New mining and processing projects across the Global South and Global North routinely encounter conflicts between national security goals, commercial viability, environmental regulation, permitting, labour, Indigenous rights, local opposition, and questions of sovereignty. Strategic urgency does not dissolve tensions.

China’s experience therefore offers something more than a unique case of authoritarian resource governance, illustrating dilemmas that accompany critical mineral strategies around the world. Strategic resource power rests not only on geological endowments or industrial capacity but on the continual work of coordinating diverse political and economic actors around shared objectives. As governments across North America, Europe, Australia, and elsewhere pursue their own critical minerals strategies, they are confronting many of the same governance challenges. Diversifying supply chains does not inherently produce resilient or just ones. Strategic advantages and minerals, as forms of economic statecraft, depend on how they are governed. When it comes to REEs, the future of China’s sector depends as much on export controls and geopolitical competition as on the politics of domestic implementation.