China’s Critical Mineral Controls Expand Through Supplier Self-Restriction
Strategic question
Are China’s critical-mineral controls evolving from formal restrictions to broader political pressure on companies to halt exports?
Key Judgements
The Busan agreement officially ensured the continuation of certain critical mineral exports; however, some Chinese companies may be declining to export minerals.
Chinese companies may be declining to export rare earths due to political pressure or regulatory uncertainty.
The U.S. is experiencing supply chain shortages of certain minerals and remains reliant on Chinese supply despite the Busan agreement.
India and Japan continue to have limited access to critical minerals and licence approvals.
Core Assessment
The U.S. and China have commitments to ensure the flow of rare earths and licences agreed in Busan. According to some reports, Chinese rare earth suppliers are withholding exports to the U.S. amid pressure from Beijing and concerns about repercussions. Despite the Busan agreement, U.S. supply chain data has indicated that some Chinese suppliers have declined to export rare earths since early August alongside the introduction of official Chinese-imposed sanctions. In particular, yttrium supply chains have been disrupted with low supply volumes, and some U.S. companies have waited for up to six months for supplies of the critical mineral used in advanced technologies.
Part of the concern from Chinese suppliers is reportedly that rare earths could be sold to restricted users. China's expanded restrictions included numerous U.S. companies while also creating a mechanism for reporting violations; however, the decision for some Chinese suppliers to decline to export rare earths signals that Chinese controls may be extending beyond officially listed U.S. companies.
Background
In October 2025, China announced export restrictions on rare earths prior to U.S. trade negotiations. Rare earth controls restricted access to critical minerals used in advanced technologies, such as chip processing, advanced semiconductors, logic chips, and process nodes. In an effort to de-escalate trade tension, China and the U.S. signed the Busan agreement, which included a one-year suspension of the October 2025 global export controls on rare earths and the issuance of licences for exports of gallium, germanium, antimony, and graphite.
The U.S. remains heavily reliant on specific critical minerals such as yttrium, with approximately 90% of U.S. consumption supplied by Chinese-processed material. Despite the Busan agreement, by May 2026, the U.S. reported supply chain shortages of yttrium, scandium, neodymium and indium, suggesting that the agreement did not resolve supply chain issues.
Strategic Assessment
The Busan agreement was signed to ensure the flow of certain critical minerals and prevent the deterioration of trade negotiations. Despite the agreement, some reports indicate that Chinese suppliers are declining to export critical minerals because of regulatory uncertainty or possibly Chinese government pressure. The decline in critical mineral flows to the U.S. could suggest that export controls may be having a broader effect in the form of self-enforced restrictions, where suppliers are officially permitted to continue exporting; however, for differing reasons, they choose not to. In effect, the Chinese government may also be able to leverage restricted supply while openly maintaining the position that export controls are not in place. Part of the uncertainty is for importers to interpret whether supplier reluctance is temporary or part of longer-term measures associated with official Chinese export controls.
Simultaneously, the Busan agreement may become viewed as an official position but become unreliable in practical terms. While diplomatic agreements may permit easing of formal controls, this does not ensure supply-chain predictability, as exporters can operate freely or be influenced by political pressure. For countries such as the U.S. and Europe, which are dependent on Chinese processing, economic and defence industries may continue to be exposed to supply chain vulnerabilities, regardless of whether an agreement exists. Although the U.S., Europe, and Japan are making diversification efforts through processing capacity, refining and stockpiling, the halting of exports may highlight the need to accelerate this policy.
Countries with less leverage may have greater difficulties accessing supplies of critical minerals. Both India and Japan have had limited numbers of licences approved, and with the ongoing diplomatic tension between Japan and China, many Chinese suppliers are reportedly declining to ship to Japanese companies.
What to Watch
Diplomatic statements from President Xi Jinping's state visit to Washington regarding the status of the Busan agreement.
Critical mineral export volumes indicating whether supplier self-restrictions are affecting export flows.
India's and Japan’s critical mineral licence approvals and critical mineral import volumes.
Strategic Indicators
Busan Agreement status
↔ Mixed
Critical mineral imports to the U.S.
▼ Decreasing
Critical mineral imports and licensing to India and Japan
↔ Mixed
Sources
International Reporting and Analysis
Reuters — China Rare-Earth Firms Halt Some U.S. Shipments Over Geopolitical Worries
Reuters source
The Diplomat — Why the World's Hedging Responses to China's Rare-Earth Dominance Have Failed
The Diplomat source
South China Morning Post — China's New Rare-Earth Export Controls Will Impact Global Chip Supply Chain, Analysts Say
South China Morning Post source
Observer Research Foundation — The Busan Rapprochement: The U.S.–China Trade Deal
Observer Research Foundation source
United States Government
The White House — President Donald J. Trump Strikes Deal on Economic and Trade Relations with China
White House source
The White House — President Donald J. Trump Secures Historic Deals with China, Delivering for American Workers, Farmers, and Industry
White House source
U.S. Geological Survey — Minerals Net Import Reliance on China
USGS source