Beijing’s grip on critical minerals is tightening and the global tech and defence sectors are feeling the heat.
China’s exports of rare earth permanent magnets plunged by 52.9 per cent in May compared to April, sinking to their lowest monthly level in over five years, according to official data released by the General Administration of Customs, as reported by Reuters.
Shipments dropped to just 1,238 metric tons, marking not only a month-on-month crash but also a 74 per cent slump compared to the same period last year. The data underscores the growing global impact of China’s stricter export curbs on these strategic materials.
What’s driving the export plunge?
The sharp drop follows Beijing’s move in early April to tighten export controls on seven types of medium-to-heavy rare earth compounds and select magnet products. China, which produces over 90 per cent of the world’s rare earth magnets, cited national security and supply chain stability as the rationale behind the new rules.
Industry insiders told Reuters that Chinese customs officials have become increasingly cautious in approving outbound shipments, especially magnets, a product category that contains various chemical compositions but is grouped under a single export code. This ambiguity, combined with tighter screening, has created bottlenecks.
Global impact on high-tech industries
Rare earth magnets are crucial components in electric vehicles, wind turbines, smartphones, aerospace systems, and military equipment. The sharp decline in Chinese exports is now reverberating across global supply chains, raising concerns for manufacturers dependent on steady flows of these materials.
Even lower-performance magnets used in household appliances and consumer electronics are reportedly being held up at customs, due to confusion over the applicability of the new curbs, sources told Reuters.
Beijing promises approvals but offers few details
China’s commerce ministry said on Thursday that it had approved “a certain number” of export licence applications. However, no breakdown or figures were provided.
Two major Chinese producers – JL MAG Rare-Earth and Innuovo Technology – recently confirmed that they had secured export permits for a limited number of clients, offering a glimmer of hope for some buyers, though broader supply disruptions persist.
Between January and May 2025, China’s total exports of rare earth magnets dropped 14.5 per cent year-on-year to 19,132 tons, the lowest for the period since 2021, as per Reuters.
A strategic lever in trade diplomacy
The rare earth export slowdown comes even as US-China trade tensions show tentative signs of easing. Earlier this month, Beijing pledged to accelerate the export approval process, a signal of goodwill following recent diplomatic engagement with Washington.
Still, the sharp drop in May suggests that policy implementation on the ground remains tight, and global industries may face months of turbulence ahead.
With the world’s clean energy and defence ambitions increasingly tied to rare earth availability, China’s export chokehold is quickly becoming one of the key fault lines in global trade and technology geopolitics.