China’s Rare Earths Dominance Raises Strategic Concerns, but Threat May Be Overstated

As geopolitical tensions between the United States and China persist, renewed focus has fallen on China’s dominance in the rare earths market and its potential use of these critical minerals as a strategic lever.

Yet while China maintains a commanding position in the global supply chain, the actual scale of its influence—and the risk it poses—may be more nuanced than commonly portrayed.

Rare earth elements, a group of 17 metals including neodymium, yttrium, and dysprosium, are vital components in technologies ranging from fighter jets and guided missiles to electric motors and wind turbines. Despite their name, these elements are not geologically rare, but the process of extracting and refining them is technically challenging and environmentally costly.

Bloomberg Opinion columnist Javier Blas, in a recent discussion recorded in London, emphasized that rare earths are often misunderstood.

“They’re not as rare as people think,” he noted.

Blas pointed out that the total US import volume is modest—around $170 million annually—and that a significant portion is used in everyday items like vacuum cleaners.

Nonetheless, rare earths are deeply embedded in US military systems. For example, every F-35 fighter jet contains nearly 900 pounds of rare earth materials, while submarines require even more. Magnets made from these elements are essential for starting engines, powering emergency systems, and enabling precision-guided missile targeting.

The recent decision by Beijing to require special export licenses for six types of heavy rare earths and rare earth magnets marks what many see as a symbolic warning rather than an outright embargo. Industry experts believe China is signaling its ability to disrupt US defense production if tensions escalate further.

“This is a heads-up shot,” said one Air Force official.

Aaron Jerome, a metals trader in the UK, pointed to the 2022 incident when the Pentagon paused deliveries of F-35 jets after discovering a Chinese-made alloy in a key component, underscoring the vulnerabilities in US defense procurement. Though deliveries resumed a month later, the event highlighted China’s deep integration into the global rare earth supply chain.

Historically, the US was once a leader in rare earth production, particularly through the Mountain Pass mine in California. After years of dormancy, the mine has resumed operations under MP Materials but still lags far behind China, which refines nearly all of the world’s heavy rare earths and produces about 90% of global rare earth magnets.

Efforts to rebuild domestic capacity have been underway since the 2010 standoff between China and Japan, when Beijing suspended rare earth exports in a diplomatic dispute. Both the Trump and Biden administrations issued executive orders and funding initiatives to expand US production and processing capabilities. However, industry experts warn that the current stockpiles maintained by defense companies and the Pentagon would only last months if supplies were disrupted.

While China’s market dominance remains a strategic concern, Blas and other analysts argue that the threat is as much about perception as reality.

“Rare earths have become a symbol of economic vulnerability,” said Blas, “but in scale and in trade value, this is a relatively small market.”

Even so, experts agree that diversifying supply chains and bolstering domestic production remain essential steps for long-term security. Historical precedent, such as the US effort to source bauxite domestically during World War II, suggests that such transitions are possible, though they require significant investment and time.

Bloomberg and the New York Times contributed to this report.