On August 23, 2025, the global rare earths market was once again thrust into the spotlight as China lifted export curbs on rare earth magnets to India, marking a significant shift amid a recent diplomatic thaw between the two Asian giants, according to The Economic Times. But this move, while relieving immediate supply pressures for Indian industries, highlights a much broader and more complex game—one in which China continues to wield its dominance over critical minerals as a potent geopolitical tool.
Rare earth elements (REEs) are the unsung heroes of the modern world. These 17 metals, though not especially rare in the earth’s crust, are indispensable to everything from smartphones and electric vehicles to wind turbines, advanced electronics, and even defense systems. The catch? Economically viable deposits are few and far between, and extracting them can be an environmental minefield. As a result, China has come to dominate this arena, accounting for roughly 60-70% of global production and a staggering 92% of refining and processing capacity, as reported by the International Energy Agency and cited by Reuters and The Epoch Times.
This dominance gives Beijing enormous leverage—not just over raw materials, but over entire industries and economies worldwide. For India, which still imports the bulk of its rare earth needs from China, the implications are profound. Any disruption, whether temporary or long-term, can paralyze vital sectors like clean energy, electronics manufacturing, and defense production. In fact, the recent curbs had threatened to do just that, prompting a flurry of government activity in New Delhi aimed at securing alternative sources and ramping up domestic capabilities.
But China’s on-again, off-again approach to rare earth exports is hardly new. In early April 2025, Beijing imposed export controls on seven rare earth metals and magnets made from three of them, requiring exporters to apply for special licenses and submit documentation proving that overseas clients wouldn’t use the materials for military purposes. The application process could take up to 45 days, according to China’s Ministry of Commerce. The result? A sharp drop in rare earth exports in May 2025, hitting a five-year low and forcing some automakers outside China to halt production, as reported by The Epoch Times.
China’s Ministry of Industry and Information Technology followed up on August 22, 2025, with new interim measures to further tighten its grip on the sector. The regulations require rare earth producers to set up internal tracking systems, record production flows, and submit monthly reports to a national database. The quota system was expanded to include imported raw materials and monazite ore, effectively giving China control over about 92% of the global rare earth supply, according to Wong Xin of CSCI Pengyuan. While the finalized regulation removed language that had previously restricted production to major state-owned conglomerates, it still limits participation to companies qualified by Beijing.
This is not just about economics—it’s about power. China’s willingness to use its rare earth dominance as a bargaining chip is well documented. Back in 2009, during a territorial dispute with Japan, Beijing temporarily blocked rare earth exports to its neighbor. The ban was eventually undermined by rampant smuggling, but the message was clear: access to these minerals could be turned on or off depending on the geopolitical climate.
India, for its part, appears to have gotten the message loud and clear. Prime Minister Narendra Modi, in his August 15, 2025, Independence Day address, emphasized the country’s push for self-sufficiency in critical minerals, with exploration campaigns now underway at more than 1,200 locations across India. The government has opened up the mining sector to private investment under the Mines and Minerals (Development and Regulation) Amendment Act, aiming to harness more of India’s own resource potential. State-owned miner IREL is actively seeking collaborations with Japanese and South Korean companies to kickstart commercial production of rare earth magnets, according to The Economic Times.
India’s diplomatic efforts have also broadened. The government has inked bilateral agreements with a host of countries—including Australia, Argentina, Zambia, Peru, Zimbabwe, Mozambique, Malawi, and Cote D'Ivoire—as well as organizations like the International Energy Agency. India and Russia are exploring joint opportunities in rare earth and critical minerals extraction as well.
Yet, the road ahead is hardly smooth. Rare earth mining and processing are technologically complex and environmentally sensitive, requiring long-term investment, robust R&D, skilled manpower, and international partnerships. As The Economic Times notes, India currently lacks the large-scale refining infrastructure and high-end manufacturing capabilities needed to convert raw minerals into strategic components. Developing this ecosystem will take time, money, and coordinated policy action.
Meanwhile, the West is watching China’s moves with growing unease. The United States, for example, has seen its dependence on Chinese rare earths decrease in recent years—from 80% of imports between 2014 and 2017, to 74% between 2018 and 2021, according to the U.S. Geological Survey. Still, the vulnerability remains. In mid-July 2025, U.S.-based MP Materials announced a multibillion-dollar agreement with the Department of Defense to boost domestic rare earth production and reduce reliance on China. As Representative Young Kim (R-Calif.) put it after visiting the Mountain Pass Rare Earth Mine, “China’s move to restrict critical minerals supplies on April 4 was a sucker punch to U.S. industries and a wake-up call to Washington.”
China’s recent regulatory tightening is also aimed at curbing illegal flows and smuggling, particularly as the country seeks to shore up its control over strategic minerals. In May 2025, officials from 10 state agencies and seven mineral-rich provinces convened to formulate strategies for even stricter oversight, following another high-level meeting in Shenzhen that launched a special operation against illegal flows of strategic minerals.
Despite these crackdowns, rare earth shipments from China saw a sharp rebound in July 2025 after three rounds of trade talks with the United States, offering a temporary reprieve for global industries. But the underlying risks remain. As The Economic Times cautions, the lifting of Chinese export restrictions to India should not be mistaken for long-term security. Rather, it must serve as a clear warning—and a catalyst—for countries like India to accelerate efforts toward critical mineral security, technological self-reliance, and economic resilience.
Ultimately, the only way to neutralize China’s leverage is to reduce the dependence that gives it power in the first place. For India, this means blending strategic foresight with industrial policy, private sector innovation with public investment, and international collaboration with domestic capability. The time to act, as many have learned the hard way, is not when the next embargo hits, but now—while there’s still time to build a more resilient future.
