Highlights
- China has approved rare earth exports to South Korean companies while maintaining restrictions on U.S. access, showcasing a sophisticated economic diplomacy strategy.
- Beijing’s export controls on seven strategic rare earth metals reveal its dominant position in global rare earth processing, controlling over 80% of global capacity.
- The selective export approvals underscore the need for the U.S. and its allies to develop coordinated industrial strategies for rare earth supply chain resilience.
In a move that underscores both the leverage and selectivity of Beijing’s rare earth export strategy, China has reportedly granted rare earth export approvals to major South Korean firms, while keeping the door firmly shut on U.S. access.
According to South Korea’s Ministry of Trade, Industry and Energy (opens in a new tab), Beijing has approved rare earth exports to several Korean companies in recent weeks despite its sweeping April 4 controls on seven strategic rare earth metals. These approvals mark the first known exemptions granted since the new export licensing regime took effect.
This development comes just weeks after a sharp escalation in the U.S.-China trade conflict. On April 2, the Trump administration imposed a 34% reciprocal tariff on Chinese imports, prompting an immediate and coordinated response from Beijing: a 34% tariff on U.S. goods and the rollout of sweeping export controls on seven key rare earthelements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
These elements are essential to sectors including defense, electric vehicles, wind turbines, and consumer electronics. China, which controls over 80% of the global rare earth element (REE) processing capacity, has weaponized this dominance before, most notably during its 2010 embargo against Japan. But this time, the message to Washington appears both calculated and crystal clear: We control the tap, and we choose whom to favor.
Export Approvals as Economic Diplomacy
The decision to selectively resume exports to South Korean companies while maintaining restrictions on U.S. firms illustrates China’s use of asymmetric economic diplomacy. The South Korean government, which has been in continuous discussions with its Chinese counterparts via hotlines, is reportedly monitoring the situation closely and urging expedited processing. Still, the approvals come with caveats—export licenses take up to 45 days to secure, leaving supply chains vulnerable to bureaucratic or political bottlenecks.
A South Korean government official stated, “With China approving exports to several South Korean companies, immediate concerns over the domestic rare earth supply chain have eased somewhat… However, delays remain.”
In contrast, no such easing has been extended to the United States. Even after the May 12 U.S.-China negotiations in Geneva, which resulted in a mutual 115 percentage point tariff rollback and eased restrictions on dual-use technology exports, Beijing kept rare earths off the exemption list. This selective engagement reveals a deliberate strategy: maintain leverage where it matters most.
Implications for the U.S. and Allies
The move places U.S. national security planners in a precarious position. While the U.S. continues to invest in domestic mining and magnet production capabilities—including MP Materials’ Texas facility and the Pentagon’s support for magnet-to-missile vertical integration—progress remains nascent and vulnerable to price fluctuations and supply chain disruptions.
China’s ability to grant or withhold access based on geopolitical favor, rather than just market mechanics, highlights the limitations of current Western diversification strategies. It also raises questions about the effectiveness of U.S. tariffs when key upstream dependencies remain unaddressed.
South Korea’s Middle Path
South Korea’s diplomatic balancing act may be instructive. By maintaining open communication with Beijing while quietly supporting the diversification of the rare earth supply chain through domestic initiatives and Japan-Korea joint ventures, Seoul has carved out breathing room, at least temporarily.
Still, the lesson is clear: access to rare earths is no longer guaranteed by contract or commerce alone. It is now firmly embedded in the logic of geopolitical favor and retaliatory trade.
Time to Rethink U.S. Strategy
China’s selective export approvals to South Korea—but not the United States—should serve as a wake-up call. This is not simply a trade dispute. It is a contest over control, coercion, and critical materials in an era of “weaponized interdependence.”
For Washington and its allies, the takeaway is urgent: diplomatic resets and trade truces will not be enough. What’s needed is a coordinated industrial strategy—one that reshapes market incentives, invests in scalable refining and magnet-making infrastructure, and creates stockpiles and offtake guarantees to support non-Chinese producers.
Until then, China will continue to wield rare earths not just as resources, but as geopolitical instruments.
Source: BusinessKorea (opens in a new tab), May 25, 2025
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