China’s rare earth export curbs a tactical response to US, says Taihe Institute’s Einar Tangen

China’s recent move to tighten export rules on rare earth minerals is being seen as a tactical response to US trade pressures, according to Einar Tangen, Senior Fellow at Taihe Institute and Chairman of Asia Narratives at Substack.

The new curbs, which will cover a range of critical minerals including lithium batteries, cathodes, and graphite anodes, are expected to take effect from 8th November.

“Right now, I would say this is tactical, but at some point, if there isn’t some light at the end of these negotiations, it could turn into a reality,” Tangen told CNBC-TV18, explaining Beijing’s rationale for the move.

The Chinese government has also imposed restrictions on the export of certain electric vehicle (EV) technologies, tightening its grip over the global clean energy ecosystem. Beijing has added at least five new categories of rare earth magnets to its export control list, signalling a broader strategy that could affect the global EV supply chain.

Suhail Nathani, Managing Partner at ELP, highlighted the potential implications for India’s EV industry. “Will it affect EVs? Yes, because you need these rare earth magnets to make batteries and motors. It will affect local manufacturing surely, and more importantly, even if you are able to import these materials from China, there are going to be several restrictions on how you can use them and where you can re-export them. So on both counts, yes,” he said.

Nathani further noted that China’s new export controls are part of an emerging form of economic leverage. “What differs in China using this tool is that they control, depending on how you look at it, 70-90% of these raw materials which are critical for both EVs, defence, and a host of other products. Being almost a monopoly supplier, they are able to dictate the rules a lot more effectively,” he said.

Industry sources told CNBC-TV18 that the curbs will apply globally, affecting all countries that import critical EV materials from China. The restrictions are seen as a likely response to US measures that limit chip exports to China, and they come ahead of a potential meeting between President Xi and President Trump.

India’s auto industry has informed the government about the new curbs and is expected to seek guidance in the coming days. While some automakers believe there will be no immediate impact, others expect the move to pose challenges for the localisation of batteries and cells, a key focus area for India’s EV sector.

Tangen also pointed out the strategic dimension of China’s policy. “The concern in Beijing is that things shipped to one country will end up in a third country, particularly the US. Currently, India imports nearly all of its rare earth permanent magnets, about 4,000 tonnes annually, and that’s projected to double by 2030. China is a large part of it,” he said, underlining the importance of rare earths in both EVs and wider industrial applications.

With 14 new categories added to its export control list, China is signalling that it will continue to closely manage the supply of critical materials, leaving India and other countries to navigate a more complex and tightly controlled global market for EV components.

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