As of late October 2025, China's rare earth export licensing
system, imposed in April 2025, remains in place, though Beijing announced a
one-year pause on new expanded restrictions announced in October 2025 following
a potential trade deal with the U.S. during an APEC summit. This highlights
Western vulnerability due to China's dominance and recent restrictions.
Key Details
China's Restrictions: In April 2025,
China's Ministry of Commerce introduced export controls requiring special
licenses for seven specific medium and heavy rare earth elements (scandium,
yttrium, samarium, gadolinium, terbium, dysprosium, and lutetium) and related
magnets. These controls caused significant supply chain disruptions for
industries from automotive to defense in the U.S. and Europe.
Military Industrial Complex/Defense
Impact: These rare earths are crucial for Western armaments, including F-35
fighter jets, Tomahawk missiles, radar systems, and drones. The Western defense
industry's high reliance on China for processing these materials has exposed a
significant strategic vulnerability.
Trump and Xi Meeting/Negotiations:
U.S. President Donald Trump and Chinese President Xi Jinping were meeting on
the sidelines of the APEC Summit in South Korea in late October 2025. Following
high-level talks, U.S. officials announced that China would pause the most
recent expansion of rare earth controls (announced in October 2025) for a year,
but the original, highly disruptive April licensing requirements appear to
remain in effect.
Strategic Context:
China's actions are widely viewed by analysts as a strategic use of its
near-monopoly on rare earth processing (over 80% globally) to gain leverage in
an escalating trade war with the U.S.
Western
nations are now urgently trying to diversify their supply chains, though China
is expected to retain significant market dominance for years to come. This is
important: Western military industrial complex is remaining dead for years to
come.
More emotional explanation by Germans follows:
“In South Korea, China and the United States agree on a
fragile pause in their power struggle. However, the strategic issues remain
unresolved.
The meeting of the heads of state could hardly be more
cordial. Even by their standards, Xi Jinping and Donald Trump showered each
other with praise. Trump called Xi "a good friend of mine, a great leader,
a great country" and added: "I think we will have a fantastic
relationship for a long time." The Chinese head of state remained silent
and enjoyed the moment.
Then he also said: "It feels warm to see you again,
because it's been so many years." It was 2019 when Trump and Xi last shook
hands. Now they are meeting again in a cramped conference room of the South
Korean Air Force at the Gimhae base near Busan airport. In the initial months
of the Korean War in 1950, the defense line of the American and South Korean
troops ran precisely here, defending the port of Busan against the advancing
communists and later launching a counteroffensive. But there is no mention of
that this Thursday. The weapons are silent.
Essentially, America and the People's Republic of China have
agreed in Korea on a tactical pause in their power and supply chain conflict,
without Beijing changing much of the strategic substance. China has agreed to
suspend its export restrictions on rare earth elements for one year, Trump said
on the flight back on Air Force One. In addition, Beijing will stop the flow of
substances used to manufacture the drug fentanyl, which is causing devastation
in the United States. Neither side explains exactly how this will happen.
Trade Agreement Planned
In return, America is lowering its corresponding tariffs from
twenty percent to ten percent, which, according to Trump, still means a total
of "47 percent" tariffs on Chinese goods. "Pretty soon,"
the US president added, America will sign a trade agreement with China. The
deal will be valid for at least one year. He will then fly to China himself in
April. The meeting in Gimhae on the sidelines of the Asia-Pacific Economic
Cooperation (APEC) summit should therefore probably be seen as an interim step
leading up to Trump's state visit to the People's Republic. A return visit by
Xi Jinping is also planned. Trump says: "And he will come here sometime
after that, whether it's to Florida, Palm Beach, or Washington."
If Xi were to travel to America next year, it would be
shortly before the American midterm elections. That is, when Trump is under
even more pressure to close deals and maintain good stock market performance. A
stage for major concessions, entirely in line with Xi Jinping's interests,
some suspect. If the Chinese leader comes at all, which others doubt.
Following Trump's appearance on the
presidential plane, the Ministry of Commerce in Beijing also announced that it
is suspending its export restrictions on rare earth elements, imposed on
October 9, for one year.
However, this precise date given by
the Chinese also means that the People's Republic is keeping in place its other
restrictions, imposed in April, on the seven important rare earth elements that
are also used in the armaments industry. Beijing is retaining this leverage.
Measures against ships are also suspended.
Furthermore, China announced that Washington will, in
return, suspend its secondary sanctions against Chinese subsidiaries that are
50 percent or more owned by companies on the US sanctions list for one year.
Beijing had used this American measure as justification for dramatically
expanding its export regulations, which had been prepared for months, by
recently requiring export licenses for the entire global supply chain of
magnets if they contain even just 0.1 percent of Chinese rare earth elements.
In addition, the Chinese Ministry of
Commerce announced that America is suspending its measures and fees against
Chinese ships and shipping companies for one year. China will do the same with
regard to American ships, also for a year.
According to Chinese state media, Xi Jinping emphasized
"that the economic and trade teams of both countries have had in-depth
discussions on important economic and trade issues and reached a consensus on
their resolution." Conflicts do exist, Xi said in the public part of the
meeting with Trump: It is quite natural that the USA and China "do not
always agree," and it is "normal that there are occasional frictions
between the two leading economic powers of the world."
China resumes importing soybeans from the USA
There is initially no information from Beijing regarding
China's core demand for improved access to modern chips. "We talked about
chips; they will discuss this further with Nvidia and others. We negotiated on
chips," Trump said. The US
president clarified that the discussions did not concern the Blackwell chip.
"But there are many chips, you know, a lot of chips, and that's good for
us." The issue, he added, needed to be discussed by Chinese
representatives and Nvidia itself. The US, Trump said, would merely act as an
"arbitrator" in this matter.
Before his meeting with Xi, Trump had stated that Nvidia's
modified Blackwell B30A chip would also be on the agenda of the summit. This
would have represented a significant change to the American export control
regime: This chip is considered far more powerful than the H20 variant, whose
export to China the US had permitted, but which Beijing is currently not
importing—perhaps because it is hoping for the more powerful chip? Or is less
interested in it?
"The Chinese
side seems rather reserved about this easing of technology restrictions,"
says analyst Wang Dan of the Eurasia Group. The latest five-year plan also
emphasizes the importance of domestic innovation, "because Beijing knows
that the US is not a reliable supplier of chips." The general sentiment in
China remains to procure chips from domestic production whenever possible.”
"On a scale of one to ten, the meeting was a
twelve," Trump commented on the results of the meeting, which, as far as
is known, primarily concern Chinese concessions on publicly visible
issues—issues that are important to Trump but do not touch on Beijing's core
interests. For example, China is at least partially resuming its previously
completely suspended import of soybeans from America. The soybeans come from US
states that predominantly vote Republican. This is a tactical win for Trump.
China, on the other hand, is merely returning to a previous import status, if
at all: In an initial tranche, China ordered 180,000 tons of soybeans from
America immediately before the summit.
China views the meeting as a clear win.
Even without details, Beijing is already visibly satisfied
with the results. State media reported on Thursday that "more
consensus" had been reached with America. Foreign Minister Wang Yi praised
the two heads of state as "world-class leaders" even before the
meeting. China only makes such positive public statements when it sees a clear
benefit for itself.
This applies especially to Xi's personal dealings with
Trump. At the beginning of the conversation with Trump, the Chinese president
compared the relationship between the two countries to a "large ship"
that "you and I, who are at the helm of relations between China and the
USA," should keep "on the right course." It remains unspoken
that Beijing does not want Trump to listen to figures critical of China, such
as the US Secretary of State and National Security Advisor Marco Rubio. This is
also why the negotiations between the major powers are primarily conducted
through the respective trade and finance representatives and less through the
American security apparatus. "The Chinese know that they won't get a
friendlier president than Trump," says Wang Dan. "Therefore, there is
a willingness in China to invest in Trump."
Ultimately, however, according to various experts speaking
to the F.A.Z., the clear and unmistakable trend is towards a strategic
decoupling from the United States. An unideological and purely tactically
thinking president like Trump will not come along again for China, according to
several sources. As long as Trump is in office, Beijing is trying to get as
much as possible out of the situation until the next American president again
follows the line of the China-critical foreign and security policy
establishment in America.
"China is smart enough to define intermediate goals and
then negotiate an advantage step by step," says Jörg Wuttke, the former
head of the European Chamber of Commerce in Beijing, who now works for the
foreign policy consulting firm DGA in Washington. "This will continue
until 2028," when America holds its next presidential election.
"Escalation and de-escalation is the name of the game."
Meanwhile, the trade deal with South Korea also gives the
Chinese time to further catch up technologically with the United States, thanks
to the weakening of American sanctions and tariffs achieved through
counter-pressure. And perhaps also to be able to address their own internal
problems in the People's Republic. In addition, both sides gain time to further
reduce their dependencies.
"We have a deal, and now we're going to renegotiate the
agreement every year," Trump told reporters aboard Air Force One after
departing from Korea. He assumed that Washington and Beijing would simply
"routinely extend" their deal each time.
Jochen Stahnke
Political correspondent for China, Taiwan and the Korean
Peninsula, based in Beijing.”
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