On October 9, 2025, China’s Ministry of Commerce issued sweeping new export controls on rare earths and related products through Announcement No. 61. The measures go far beyond traditional restrictions, now requiring government approval for the export of goods containing even trace amounts of Chinese-origin rare earths—including semiconductors, AI devices, permanent magnets, and sputtering target materials—regardless of where the final product is manufactured. The rule applies if the value of Chinese rare earths in a product exceeds 0.1%, and also covers items produced overseas using Chinese rare earth extraction and processing technologies.

This bold move is seen as a direct economic gambit by President Xi Jinping, targeting industries critical to both civilian and military applications—especially those where the US and its allies rely heavily on Chinese supply. From electric vehicles and wind turbines to aerospace and defense systems, companies worldwide now face potential shortages of essential components. If alternative sources cannot be secured quickly, production slowdowns or stoppages are likely.

Experts interpret the timing as a calculated signal to US President Donald Trump, who is currently campaigning for re-election, and a clear effort to gain leverage in ongoing geopolitical tensions. Rather than an outright ban, China’s approach tightens licensing procedures, suggesting a desire to maintain influence while avoiding a complete break in trade relations. Nonetheless, market reactions have been immediate, with rare earth prices surging and corporations scrambling to reassess their supply chains.

The long-term impact remains uncertain. While the move may push other countries to accelerate efforts to build independent rare earth supply chains—a process already underway in the US, Europe, and Japan—it also underscores how deeply global technology and defense industries depend on materials controlled by China. Xi’s “rare earth shock” is reshaping not only trade negotiations but also the broader strategic landscape of global security and technological competition.