China’s grip on the global rare earths market has again taken center stage as the world’s two largest economies—China and the United States—scramble to secure supplies of the critical minerals underpinning everything from electric vehicles to national defense. In a series of developments reported on August 29, 2025, both nations revealed bold new moves: China’s President Xi Jinping offered Malaysia the chance to host its first overseas rare earths processing venture, while the US unveiled a sweeping expansion of its own critical minerals strategy, adding 51 commodities to its official list and launching an all-out effort to reduce foreign dependence.
During his state visit to Kuala Lumpur from April 15–17, President Xi signaled Beijing’s readiness to provide technical assistance for Malaysia’s rare earths ambitions, but with a catch: the project must be run through government-linked companies. This offer was later confirmed by Malaysia’s Natural Resources and Environmental Sustainability Minister, Datuk Seri Johari Abdul Ghani, in a written reply to parliament. It marks the first time China has opened the door for such an overseas venture, suggesting both a calculated expansion and a bid to cement influence in Southeast Asia’s growing minerals sector.
China’s move comes as its dominance over the rare earths value chain draws renewed scrutiny. According to China Daily, China now controls more than half of global mining production and a staggering 90 percent of separation and refining capacity. These rare earth elements—17 in total—are indispensable for modern technologies, powering electric vehicles, drones, wind turbines, and even data centers. The global trade in industries relying on rare earths surpassed $13 trillion in 2022, with electric vehicles alone accounting for $425 billion in sales, as reported by the Atlantic Council.
The International Energy Agency projects that demand for rare earths could increase three to seven times by 2040 as countries pursue ambitious net-zero climate goals. China’s strategic advantage, built through decades of policy focus, scientific expertise, and unique geology, has made it an irreplaceable player in the rare earths supply chain. “Some commentators treat this as an easy issue to solve, saying rare earths aren’t really that rare … What’s rare is an end-to-end ecosystem that’s been developed over decades and that also acts to prevent competitors from jumping in,” said Paul Triolo, an honorary senior fellow on technology at the Asia Society Policy Institute, during a recent webinar.
This dominance is not just about digging minerals out of the ground. China’s leadership began prioritizing rare earths as a strategic industry in the 1980s, surpassing the US as the largest producer in the 1990s. Today, China boasts over 120,000 skilled personnel working in the sector and more than 30 specialized university programs, graduating about 2,000 engineers annually. In contrast, the United States has only a few hundred specialists and a limited academic pipeline—an imbalance that makes catching up a daunting task.
While China has leveraged its market position to restrict US access to rare earth minerals—especially in response to American export controls on semiconductors—these actions have not gone unnoticed in Washington. According to China Daily, recent licensing steps by Beijing “really got the attention of the White House,” with supply disruptions even prompting a temporary shutdown at a Ford EV plant. The US is acutely aware that rare earths represent “a bigger problem than just mining rare earths,” as Triolo put it, since the entire ecosystem from extraction to finished products is what gives China its edge.
Against this backdrop, the United States announced on August 29, 2025, that it had expanded its critical minerals list by 51 mined commodities, marking the second major update since the list’s creation in 2017. The new roster includes copper, lead, silver, silicon, and potash—each vital to industries like renewable energy, electronics, agriculture, and advanced manufacturing. As Sarah Ryker, acting director of the US Geological Survey, explained, the additions reflect sectors “most affected by supply disruptions” and where “domestic investments or international trade relations could mitigate risks.”
The Department of the Interior’s expanded strategy marks a shift from a reactive to a proactive approach, using a framework that weighs supply chain disruption potential, domestic production capacity, processing infrastructure, and national security implications. The government is rolling out tax incentives, grants, loan guarantees, and streamlined regulations to boost domestic mining and processing. The aim is clear: reduce reliance on foreign sources—particularly China—by strengthening domestic capabilities and forging new international partnerships, a policy approach dubbed “ally-shoring.”
But as the US ramps up, it faces steep challenges. As reported by Yahoo Finance and The Wall Street Journal, the American rare earths ecosystem is still in its infancy. Even though the US mines some heavy rare earths domestically, it lacks the capacity to separate them, leading to a continued reliance on Chinese facilities. The Department of Defense recently invested $400 million for a 15 percent stake in MP Materials, the nation’s only rare earth miner, to help build a new magnet manufacturing facility. It also guaranteed a minimum price of $110 per kilogram for neodymium-praseodymium oxide for ten years—double the current market rate—to shield the company from price swings. Meanwhile, other firms like USA Rare Earth and American Rare Earths are racing to develop domestic production, bolstered by substantial government funding.
Still, experts warn that building a robust rare earths industry in the US will take decades, not years. “Jumping headfirst into the mining business comes with risks inherent to sometimes speculative projects,” noted an analysis in The Wall Street Journal. The sector faces high capital costs, long permitting timelines, technical complexity, and uncertain policy support—especially given the country’s polarized politics. For instance, President Donald Trump’s rollback of incentives from the Biden-era Inflation Reduction Act has already led to the potential cancellation of many planned projects, signaling to investors that government support may be fleeting.
Despite these hurdles, the US government expects short-term impacts such as increased investment, accelerated permitting, research expansion, and the creation of strategic stockpiles within one to three years. Over a five- to ten-year horizon, the strategy envisions reduced import dependencies, new jobs, and a more resilient supply chain—ambitions that remain aspirational given the scale of the challenge.
Meanwhile, China’s offer to Malaysia to host a rare earths processing plant signals its intent to expand its influence while maintaining control over the value chain. According to Malaysia’s Natural Resources and Environmental Sustainability Minister, the offer hinges on the project being managed by government-linked companies, ensuring Beijing retains a degree of oversight. For Malaysia, this presents both an opportunity and a test: can it benefit from China’s expertise while safeguarding its own strategic interests?
In the end, the rare earths race is not just about minerals—it’s about the future of technology, energy, and economic security. As both China and the US maneuver for advantage, the world is watching closely, aware that the outcome will shape global supply chains for decades to come.