Highlights

• China stopped releasing rare earth production quotas in 2024-2025, using opacity as a weapon to trigger price spikes and defensive policies without imposing actual export restrictions.
• Professor Dwayne Woods' signaling model shows how informational statecraft creates a 'pooling equilibrium' where uncertainty itself becomes strategic leverage, with Chinese power peaking around 2030-2032.
• The study reframes rare earth competition as an information war rather than a commodity battle, suggesting transparency alliances and data-sharing may be key tools for Western counterstrategies.

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In a landmark study (opens in a new tab) published in the Journal of Chinese Political Science (October 2025), Professor Dwayne Woods (opens in a new tab) of Purdue University argues that China has reinvented rare earth statecraft—not by cutting supply, but by cutting information. His paper, “The Power of Withholding: Rare Earth Quotas and Informational Statecraft in China,” introduces a “signaling model” showing how Beijing’s new nondisclosure policy for rare earth quotas weaponizes uncertainty.

For the first time in thirty years, China stopped publicly releasing production quotas for rare earth mining and refining in 2024–2025. Woods finds that this deliberate silence triggered price spikes, stockpiling, and defensive industrial policies across the United States, Europe, and Japan—all without Beijing imposing actual export cuts. The study concludes that opacity itself now serves as China’s preferred form of coercion, allowing it to extract strategic advantage without the legal or diplomatic risks of an embargo.

Turning Uncertainty into Leverage

According to Woods’ modeling and historical data from 1990–2025, nondisclosure transforms global markets into what he calls a “pooling equilibrium.” In this state, both “strong” and “weak” China behave identically—by staying silent—forcing other countries to act as if Beijing holds maximum power.

The results were measurable:

• Dysprosium and terbium prices tripled in 2025 following missed quota announcements.
• Governments from Tokyo to Brussels launched new stockpiling and subsidy programs.
• The U.S. invoked “strategic uncertainty” to justify multi-billion-dollar domestic contracts for magnet refining and defense supply chains.

This mirrors a broader trend of “informational statecraft”—where control over knowledge, not just material supply, becomes the true source of leverage.

What This Means for Global Supply Chains

For investors and policymakers, Woods’ findings are a stark warning: China’s power increasingly lies in opacity, not monopoly. Even if Western nations expand mining or refining capacity, as long as Beijing controls the flow of credible information, market psychology remains in its grip.

Importantly, this opacity and information asymmetry is a major driver behind the Rare Earth Exchanges (REEx) model of full transparency, accessibility, and insights.  Certainly, the implications stretch beyond elements and even minerals. Woods connects rare-earth opacity to patent secrecy and export control laws, suggesting that China’s intellectual property restrictions will soon create the same coercive uncertainty in the technology sector.  And for the REEx community, this is exactly what has been a subject of intense interest.  China will use and exploit the growing intellectual property (IP) wall in the rare earth and critical mineral sectors.

The author’s forecast places the peak of Chinese leverage around 2030–2032, before alternative supply chains and recycling technologies mature enough to counterbalance Beijing’s dominance.  This general prediction dovetails with REEx forecasts, if not a bit early.

The Study’s Limitations

While groundbreaking, the study is primarily theoretical. It models belief systems and behavioral responses using historical datasets and econometric proxies rather than direct firm-level data. It also assumes that other nations respond rationally to uncertainty—an elegant simplification that may not capture the messy realities of global politics.

Moreover, Woods’ framework stops short of prescribing specific remedies. It explains why China’s opacity works, but not how other states can systematically neutralize it. Of course, subscribe to REEx, and such information can be found.  As for the author, future research will need to address how transparency alliances among the U.S., EU, Japan, and Australia could reintroduce credible market signaling.

Conclusion

Woods’ work reframes the rare earth struggle as an information war, not a commodity battle. China’s silence speaks louder than sanctions, forcing rivals to hedge against ghosts. For markets, this means volatility by design. For Western policymakers, it’s a call to action: transparency and data-sharing may be the new tools of deterrence, suggesting even more relevance associated with the REEx platform.

Citation: Woods, D. (2025). The Power of Withholding: Rare Earth Quotas and Informational Statecraft in China. Journal of Chinese Political Science.

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