War for Rare Earth Metals: Beijing Tightens Control Just Before Trump’s Visit

In two weeks, Donald Trump is scheduled to meet with Xi Jinping in Beijing. It will be Trump’s first visit to Beijing in nearly a decade.

Although it is unclear what topics will be discussed during the summit, many observers expect that the issue of rare earth elements (17 minerals essential for producing permanent magnets, wind turbines, and electronics) will come up due to their strategic importance.

According to Bloomberg Economics, roughly $1.4 trillion of the U.S. economy is linked to industries that rely on these minerals.

China currently accounts for more than two-thirds of global rare earth mining and almost monopolizes the refining process. Last year, Beijing leveraged this dominance by restricting exports of seven rare earth elements in response to U.S. tariffs imposed by President Donald Trump.

Now Xi wants to strengthen his negotiating position ahead of the meeting with Trump.

China has tightened its control over rare earth production, increasing oversight of the sector.

A draft document published by the Ministry of Industry and Information Technology (MIIT) outlines a new regulatory framework that introduces administrative penalties for Chinese rare earth producers for specific violations.

These include exceeding production quotas in mining and smelting, as well as unauthorized separation activities. For example, a company that exceeds its quota by less than 10% may face fines of up to five times its illegal gains.

In more serious cases (such as producing more than 30% above quota), business licenses may be revoked – highlighting China’s push for full control over the rare earth sector.

In addition to financial penalties, companies may lose their products and equipment, which can be confiscated by the state. They may also be punished for selling illegally mined or processed materials and for improper reporting of production flows.

MIIT stated that it is currently seeking public feedback on the proposed guidelines.

This latest initiative strengthens the long-standing system of production quotas, environmental controls, and industry consolidation in China – the world’s undisputed largest producer of rare earth elements.

Finally, it’s worth noting the recent launch of a new ETF focused on rare earth companies, which deliberately excludes Chinese firms from its portfolio.

This is the trend: China is tightening its grip on rare earth elements, while the West is trying to build its own REE supply chain – a process that cannot be completed quickly. Therefore, rare earth metal prices and the valuations of Western companies in this sector are worth keeping on your radar.