Rare Earth Exports Surge 21%! The Global Battle Behind China's "Industrial Vitamins"

In the summer of 2025, a piece of news shook global supply chains: China’s rare earth exports soared to 5,994 tons in July, a year-on-year increase of 21%, hitting a record high since the imposition of export controls earlier in the year. Behind this figure lies the technological rivalry between China, the U.S., Japan, and Europe, the rapid advancement of the new energy revolution, and China’s strategic shift from "resource exporter" to "technology exporter."

1. Who Is Buying China’s Rare Earths? Japan Leads, the U.S. Rushes to Stock Up

Japan is the undisputed top buyer of Chinese rare earths. In the first half of 2025, Japan accounted for 58.3% of China’s rare earth metal and alloy imports, meaning six out of every ten tons of rare earths were shipped to Japan. These materials are used to manufacture motors for new energy vehicles, joints for industrial robots, and high-end sensors, supporting the global expansion of giants like Toyota and Fanuc.

The U.S. is also a significant player. Although California has rare earth mines, 80% of U.S. rare earth concentrate is shipped to China for processing into magnets—akin to sending wheat to China to be milled into flour and then shipped back to bake bread. In June 2025, China’s exports of rare earth magnets to the U.S. surged by 660% to 353 tons. The immediate cause was the release of backlogged orders after a Sino-U.S. trade agreement was reached. More importantly, the "grace period" for U.S. tariffs on China was set to expire in August, prompting downstream companies to stockpile early to avoid risks. Countries like South Korea and Vietnam also accelerated imports, creating a regional buying frenzy.

The Netherlands and the Taiwan region of China act more as "middlemen." The Netherlands resells 26.4% of imported rare earth compounds to European automakers, while the Taiwan region processes 16.6% of rare earths into precision electronic components, which ultimately end up in tech giants like Apple and Tesla. This "China-Middleman-End User" chain makes rare earths the "invisible lifeblood" of global supply chains.

2. Why the Sudden Surge? Policy Adjustments + Soaring Demand

In April 2025, China imposed export controls on seven types of medium and heavy rare earths, including samarium and terbium, causing exports of magnets to the U.S. to plummet by 82% in April-May. Yet, just two months later, exports rebounded sharply. This turnaround was driven by three factors:

First, targeted policy easing. China’s Ministry of Commerce expedited the approval process in June, prioritizing licenses for European automakers and Vietnamese processing plants while maintaining strict restrictions on U.S. military-industrial companies. For instance, German automaker Volkswagen resumed production after securing supplies of rare earth magnetic materials, while the production of U.S. F-35 fighter jets faced stagnation risks due to a shortage of samarium-cobalt magnets. This "differentiation strategy" alleviates international pressure while tightening control over critical U.S. military supplies.

Second, rigid demand from the global new energy revolution. In 2025, global sales of new energy vehicles exceeded 30 million, each requiring 2-5 kg of rare earth magnets. Wind power installation capacity grew by 40% year-on-year, with each permanent magnet turbine consuming one ton of rare earth oxides. Eighty percent of China’s exported light rare earths (praseodymium, neodymium) flowed directly into these sectors. As a worker from the Bayan Obo Mine in Inner Mongolia put it, "We’re not digging dirt; we’re digging the keys to the future."

Third, geopolitical stockpiling. With the U.S. tariff grace period nearing its end, companies rushed to place orders early to avoid additional tariffs of 10%-25%. Firms like South Korea’s LG Chem and Japan’s Sumitomo Electric even chartered planes to transport rare earths, fearing they would miss the "last bus." This panic buying further drove up short-term export volumes.

3. The Paradox of Rising Volume and Falling Prices: China’s Strategic Game

Despite soaring export volumes, rare earth prices fell. From January to July 2025, the value of China’s rare earth exports decreased by 23.3% year-on-year, creating a paradox of "rising volume but falling prices." This reflects China’s strategic intentions:

In the short term, China is ensuring global supply chain stability by easing exports of rare earths for civilian use. European automakers and Vietnamese processing plants can maintain production and avoid layoffs, indirectly reducing trade criticisms against China. Meanwhile, China continues to tightly control military-use rare earths (e.g., samarium-cobalt magnets), ensuring strategic resources are not used against its interests.

In the long term, China is transitioning from "selling raw ore" to "selling technology." Companies like Northern Rare Earth are no longer content with exporting raw materials; instead, they are directly exporting value-added products like neodymium magnet powder to Europe and rare earth catalysts to Japan. In 2024, Northern Rare Earth’s profits from high-value-added exports grew by 40%, proving that "technology exports" are more profitable than "resource exports." As a government report from Baotou stated, "We will make rare earths carry Chinese technology to the world."

4. The Rare Earth War Is Far From Over: What Cards Does China Hold?

Despite record export volumes, China’s control over rare earths is strengthening. Ninety percent of global rare earth refining relies on Chinese technology. Civil unrest in Myanmar reduced supplies of medium and heavy rare earths by 70%, and U.S. company MP Materials halted exports of rare earth concentrate to China, making domestic companies more reliant on local resources. More importantly, China is establishing a rare earth futures market, poised to control pricing power much like it does with oil.

The 2025 rare earth export surge is essentially China’s strategic "advance by retreating" in the global supply chain. When Japanese automakers use Chinese rare earths to build motors and U.S. missiles rely on Chinese-processed magnets, the outcome of this silent war is already clear.