China is tightening export restrictions on critical minerals like rare earths, cobalt, and graphite—materials essential for energy tech, electronics, and defense. While this move gives China short-term leverage in global trade, especially amid tensions with the West, it risks encouraging Western nations to build their own supply and refining infrastructure. Though costly, the West may prioritize security over price, potentially leading to a long-term shift away from reliance on Chinese materials and the emergence of a two-tier global metals market.
China can only use the big gun once; overplaying this strategy could backfire by accelerating the West’s push for independence, according to Clyde Russell at Reuters. Russell writes:
China is once again rolling out the big cannon of curbs on metals and minerals vital to the global energy transition, as well as key components in weapons and electronics. […]
China has recently decided to tighten up its export restrictions on minerals such as magnetizing minerals.
This behaviour is not without risk for China, since the cannons of export restrictions can only be fired in anger once.
It would be a major disruption for Western supply chains if China were to decide to stop selling metals to Westerners, such as rare Earths, lithium cobalt antimony tungsten tungsten, and other metals.
It would also lead to a rapid expansion of supply and processing infrastructures in the West. […]
China’s export restriction will likely lead to the creation of a global two-tier system for critical metals. This system would be more expensive for Western consumers, but also safer. It would also result in a Chinese system which is cheaper and subject to Beijing’s demands.
Read more here.