Post-China Rare Earth Monopoly Era Is Approaching as Beijing’s Strategy Backfires: Experts

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As China uses its rare earth monopoly to threaten the survival of the U.S. military, computer chip, and automotive industries, it has spurred the arrival of a post-China rare earth monopoly era. The United States is working with allies to establish a rare earth supply chain independent of China.

Experts have also designed a mechanism to sustain the Western rare earth supply chain to counter the impact of China’s low-price strategy.

U.S. Treasury Secretary Scott Bessent told the Financial Times on Oct. 31 that Beijing’s threat to halt rare earth exports was “a real mistake,” and said that China can no longer use rare earths as a tool of coercion in the near future. He said Chinese leverage over the United States in rare earths would last no more than 12 to 24 months.

While there are differing opinions on how long it will take for the United States to establish its own rare earth supply chain, many officials and experts agree that China’s use of a rare earth monopoly to threaten the United States will be “shooting itself in the foot.”

Kenneth Rogoff, former International Monetary Fund chief economist and current Harvard University professor of international economics, told The Epoch Times, “I can guarantee you that China’s monopoly position will be badly weakened by its actions, because over time, countries will find other sourcing.”

Northeastern University Professor of Electrical and Computer Engineering Vincent Harris told The Epoch Times that while China’s use of rare earths to intimidate the world appears powerful, it is actually entering a dangerous situation.

“This is like a poker game. And China has used the rare earth monopoly that it enjoys as a geopolitical tool,” Harris said.

“Some say a geopolitical weapon in order to influence and get its way by withholding or enforcing quotas on rare earth.

“The Japanese vowed that they would not let this happen again. And in 2011, 2012, the Japanese took very strong action to try to stockpile rare earth magnets in order not to allow the Beijing government to ever do this again,” Harris said. “They had some success in doing this.”

In addition to stockpiling, recycling, and promoting alternative technologies, Japan has also heavily invested in rare earth projects outside of China—particularly in Australia’s Lynas Rare Earths, the largest rare earth producer outside of China.

According to data provided by Argus Media, Japan’s overall dependence on Chinese rare earths has decreased from over 90 percent at the time of the collision to below 60 percent.

“I believe the European Union and the U.S. automobile industries have paid attention to this lesson from Japan in 2010 and 2011,” Harris said.

“So, when China uses the same tactic of unfair trade practices, using the rare earth monopoly as a tool and as a weapon—as a trade weapon, if you will, a geopolitical trade or commercial weapon—against the automobile industries, they are exposing themselves very dangerously to seeing the European Union and ... the American automobile industries to seek alternative sources or alternative solutions to the rare earth problem.”

Harris continued, “If they take action and they succeed, then the Chinese are left with no cards to play, so Beijing must be very careful not to push this too far.”

This year, China is again using rare earths as leverage in its trade war with the United States.

On Oct. 9, China’s Ministry of Commerce issued Announcement No. 61 of 2025, implementing the strictest export controls to date on rare earth and permanent magnets. Under these measures, foreign companies exporting magnets containing trace amounts of Chinese rare earth materials or produced using Chinese mining, processing, or magnet manufacturing technologies must obtain approval from the Chinese government.

Given China’s dominant position in this field—accounting for approximately 70 percent of rare earth mining, 90 percent of separation and processing, and 93 percent of magnet manufacturing—these measures will significantly impact U.S. defense production, including F-35 fighter jets, Virginia-class and Columbia-class submarines, Tomahawk missiles, radar systems, Predator drones, and the Joint Direct Attack Munitions series of smart bombs, thus posing a major threat to U.S. national security.

At this critical juncture, the U.S. government signed rare earth mining cooperation agreements with several countries, including Australia, Japan, Thailand, and Malaysia, within just 10 days.

On Oct. 20, during the Australian prime minister’s visit to the White House, the United States and Australia signed an agreement aimed at increasing the supply of rare earth and other critical minerals.

“When we go to sell those on the open market, company to company, head to head. Our product cost is going to be 100 times higher than the company coming out of Baotou. That’s just a hard fact now,” Harris said.

The huge price difference between U.S. and Chinese products is due to the highly polluting nature of rare earth mining. The Environmental Protection Agency sets strict environmental standards for mining companies in the United States, while China, in its pursuit of a rare earth monopoly, chooses to sacrifice the environment and public health.

“Something very, very important took place in 1980 to 1990. And that was in mainland China, a decision was made that they were going to do whatever was necessary to process those materials [in] an affordable, cost-efficient manner, no matter what the consequence is,” Harris said. “And that means even to the detriment and the destruction of the Chinese mainland environment and the water supply in order to make the world’s best magnets. And that is the deal they made with the devil.”

Harris estimates that rare earth magnets manufactured by American companies could cost 100 to 500 times more than Chinese magnets.

Harris, who previously worked at the State Department, suggested to the secretary of state that the Kimberley Process be used to track rare earth products and prohibit Western companies from purchasing Chinese rare earth products to ensure that Western supply chains could withstand China’s low-price dumping.

The Kimberley Process was established as a result of the mining of “blood diamonds,” diamonds mined with slave labor in Africa. Western countries decided to boycott these blood diamonds, and anyone found trading them was punished.

Harris said diamonds from the deposits in Kimberley, South Africa, have a unique radial pattern that can be used to trace their origin. Rare earth elements from Inner Mongolia also exhibit a similar radial pattern. This characteristic can be used to trace rare earth elements’ origins.

Harris suggested that Western allies should establish their own closed-loop supply chain and mandate that companies joining the system not purchase rare earth elements produced in China—even if they are 100 times cheaper.

“If we were to form a five-country consortium, then if you want to join the consortium, you have to pay higher money. However, what do you get for the higher money? You get security. You have security of supply chain, but you have to pay for it,” Harris said.

The U.S. Department of War is putting this idea into practice.

In July of this year, MP Materials, a Las Vegas-based rare earth mining company, reached a multi-billion-dollar agreement with the U.S. government. Under the agreement, the Department of War will guarantee a minimum purchase price of $110 per kilogram for two of the most commonly used rare earth elements, almost double the current market price in China.

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