The United States has been trying for months to open an exit door in one of the territories where China retains the most industrial power: rare earths. We’re not just talking about mines, but about processing, magnets, permits, entity lists and a supply chain that connects defense, automotive, semiconductors and advanced technology. What we have seen now is a fairly direct reminder of that reality: Beijing has targeted American companies that are part of that attempt to build an alternative.
The measurements. China’s latest move materializes on two levels. On the one hand, the Chinese Ministry of Commerce added ten American companies to its list of entities, which in practice means restricting operations with them. Those affected include MP Materials, owner of the Mountain Pass mine in California, as well as USA Rare Earth and Aveox. On the other hand, the Chinese Ministry of Finance announced purchasing restrictions on another 46 American companies in the defense sector. Beijing presented the measure as a response to the “unjustified” inclusion of Chinese entities on the US list of “Chinese military companies” and as a way to protect its “national security and interests.”
The immediate context. The move comes less than two weeks after the Pentagon reinstated Alibaba, Baidu and BYD to a list of Chinese companies considered a risk to US national security for their alleged ties to the People’s Liberation Army. Chinese companies denied such military connections. Therein lies one of the keys to the movement: Beijing presents its response as a response to Washington’s decisions.
Washington’s plan. The US has indeed begun to move with an unusual intensity, according to the CSIS diagnosis. The think tank outlines an industrial policy strategy that combines more than $7.3 billion in capital, direct investments, public financing and procurement commitments to accelerate magnet mining, processing and manufacturing. The Department of Defense, for example, agreed to take a $400 million stake in MP Materials and set a ten-year floor of $110 per kilogram for its neodymium-praseodymium production. It’s a lot of money, but also a race against industrial deadlines.
The difficulty. CSIS noted that the April 2025 restrictions on heavy rare earths and permanent magnets caused rapid disruptions in allied defense and industrial chains, and exposed the fragility of a system that then remained highly dependent on Beijing. However, the Financial Times takes a cautious reading of China’s recent measure. An American executive in the Asian giant, cited anonymously, described it as “measured and symbolic,” because companies in sensitive sectors, such as defense technology, already have very restricted access to contracts from the Chinese Government and Army.
Are rare earths important? The key is that rare earths are neither a laboratory oddity nor a footnote in the trade war. They are much closer to our daily lives than it seems. These 17 elements appear in components such as magnets, batteries, phosphors and catalysts, which are then used in sectors such as healthcare, transportation, electricity generation, oil refining and consumer electronics. That is, we are not just talking about minerals: we are talking about tiny pieces that can end up in a wide range of devices, including military components.
Images | with Nano Banana
In | In China, a university student can now study a degree in one of its best businesses: rare earths
