China Cracks Down on Rare Earth Smuggling, Signals Tighter Export Controls Ahead

Highlights

• China arrests mineral smugglers and tightens export controls on rare earth elements
• Chinese authorities control over 85% of rare earth refining capacity and 90% of magnet-grade production
• Crackdown signals potential supply chain disruptions for Western manufacturers and investors in technology and defense sectors

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In a move that could rattle global rare earth markets, Chinese authorities announced multiple arrests tied to the smuggling of strategic minerals, signaling an aggressive new phase in Beijing’s enforcement of export controls. The development was reported (opens in a new tab) July 19 by the South China Morning Post’s Meredith Chen during coverage of a high-level export-control summit held in Nanning, Guangxi—one of China’s key rare earth mining regions.

The Ministry of Commerce in China, backed by several other ministries, warned of “increasingly covert” tactics used to evade detection and emphasized the risk of illicit technology transfers for military use. Officials pledged stronger measures to tighten oversight of rare earth shipments, particularly those with potential dual-use applications.

Background

China currently dominates the global supply chain for rare earth elements, controlling over 85% of refining capacity and more than 90% of magnet-grade production. This crackdown comes amid rising geopolitical tension and trade realignment, especially following recent U.S.–China tariff negotiations and the reinstatement of rare earth export licensing frameworks earlier this year.

Implications for Investors

While the arrests and policy pronouncements reinforce China’s strategic grip on critical minerals, they also raise the risk of sudden export disruptions or compliance uncertainties. Western manufacturers and investors should closely monitor for follow-on restrictions or blacklists that could impact supply chains for magnets, semiconductors, and defense components.

Source: South China Morning Post, “China ramps up crackdown on strategic mineral smugglers, vows stronger export controls,” by Meredith Chen, July 19, 2025.