Chinese Firms Use Rare Earths Export Ban to Squeeze Foreign Rivals

Key Facts

Amid escalating global trade tensions, Chinese manufacturers are seizing export restrictions imposed by Beijing to dominate the global rare earths value chain. According to reports, these firms are utilizing the ban on exports to Japan and other nations as a strategic tool to displace foreign competitors and move up the industrial value chain. This shift provides a historic opportunity for domestic Chinese entities to consolidate market share while foreign entities face critical supply shortages.

These pressures mount as China controls approximately 70% of global rare earth production and up to 90% of refining capacity, per International Energy Agency (IEA) data. The ban on exporting extraction and processing technologies, initiated in late 2023, has placed Japanese firms like Shin-Etsu Chemical and Daido Steel in a precarious position, as the EV and electronics sectors remain heavily dependent on these materials. Per market data, this monopoly grants Chinese suppliers an unprecedented pricing and competitive advantage over innovators in developed markets.

Looking ahead, investors are monitoring China's manufacturing resilience, with the Services PMI reaching 54.1 in early July 2026. In the absence of immediate spot price data for rare earth elements, focus remains on further escalations in Chinese trade policy. Markets are also awaiting German Factory Orders on July 6, which may provide insights into how European manufacturing is navigating these global supply chain disruptions.