China reaffirms rare earth export controls despite U.S. summit talks

BEIJING, 24 SEPTEMBER 2026 —

China will keep licensing requirements for medium and heavy rare earths—including samarium, gadolinium, and dysprosium—despite high-level discussions with the U.S., according to Foreign Ministry responses to pre-summit questions on September 21.

Beijing’s stance, framed under national security and dual-use laws formalised in April 2025, signals rare earths will remain a strategic tool rather than a commodity.

The controls mark a shift from market-driven trade to a state-managed system where access depends on licensing and end-use reviews. While China pledged to maintain "safe and stable" global supply chains, it stopped short of easing restrictions, reinforcing its position that dual-use exports remain subject to legal and security considerations. A summit can improve predictability, but it cannot dismantle China’s legal framework, which now embeds rare earths as a tool of leverage.

For the U.S., the talks offer only temporary relief. Washington has framed dependence on China for processed minerals as a national security risk, particularly in sectors like high-performance magnets, electric vehicles, and defense systems. The White House’s January 2026 policy response—focusing on domestic processing, recycling, and supply chain diversification—underscores a long-term push to reduce exposure. Even if the summit reduces short-term volatility, it will not alter the U.S. strategy, which requires years to mature.

The asymmetry between China’s immediate control over processing and export licensing and America’s gradual adjustments creates a prolonged period of managed vulnerability. Rare earths now sit at the intersection of industry and geopolitics, giving them dual-use status that justifies Beijing’s scrutiny and Washington’s push for alternatives. Diplomacy may smooth tensions, but it cannot resolve structural dependencies.

Malaysian businesses face indirect but growing exposure. Rare earths are critical in electronics manufacturing and green energy projects, sectors where supply chain disruptions could raise costs or delay production. While Malaysia is not directly in China’s export crosshairs, industries reliant on rare earths—particularly in renewable energy and defense-related components—may face indirect pressure as global tensions persist.

The Trump-Xi summit’s real impact lies in risk management rather than policy shifts. China will likely maintain its right to screen sensitive exports while presenting itself as a stable supplier, while the U.S. will continue balancing dependence with diversification. Any clarifications on licensing procedures or civilian trade would be crisis management tools, not signs of strategic alignment.

For Malaysian policymakers and companies, the takeaway is clear: rare earths are now a battleground in geoeconomic competition. Neither side will back down from using them as leverage, leaving markets in a state of prolonged uncertainty where short-term stability masks deeper strategic divides. Businesses in supply-dependent sectors should prepare for potential disruptions, even as diplomacy seeks to mitigate immediate risks.