How China is playing the rare earths trump card — and why Ukraine couldn’t

As the trade war between the US and China continues to escalate behind the veneer of temporary truces and tactical gestures, one resource came up as the quiet but powerful centrepiece in this global contest for economic and technological dominance: rare earths.

China, long dominant in both mining and processing these critical minerals, has weaponised this control with precision, not through outright bans, but by wielding regulatory levers that have led to uncertainty in global supply chains.

"A freeze in Chinese rare earth exports would only push the US to build up its own rare earth production capacity, at which point Beijing loses this powerful card that it can play."

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Jacob Gunter, lead analyst, Mercator Institute for China Studies

In stark contrast, Ukraine, which has a vast resource of rare earth and critical minerals, has struggled to leverage its resources as bargaining chips in its tense dealings with the Trump administration.

While China has used rare earths to hold the line in trade negotiations and assert strategic strength, Ukraine's geopolitical instability and underdeveloped mineral production have left it unable to do the same.

China's calculated grip

Rare earths are a group of 17 elements that China controls nearly 70% of, in terms of global output, and processes about 90% of the world's supply. But instead of cutting off exports entirely, Beijing has opted for a far more sophisticated tool — export controls.

China placed seven rare earth elements under tighter restrictions, citing their potential military applications. These restrictions did not amount to a direct ban but introduced a licensing regime, requiring companies to disclose detailed end-user information.

Thomas Kruemmer, director of Ginger International Trade and Investment, noted, "The primary target of this was the US defence industry."

China's Ministry of Commerce defended the move on national security grounds, stating that "strengthening export controls of strategic mineral resources was crucial".

By doing so, Beijing retains oversight and discretion — and thus leverage — over outbound supply chains without disrupting its own economy.

The real genius of China's approach is not in its immediate impact, but in the aspect of disruption. "Keeping the licensing regime retains a 'credible threat' that the supply might be disrupted very suddenly," explained Jacob Gunter, lead analyst at the Mercator Institute for China Studies.

"A freeze in Chinese rare earth exports would only push the US to build up its own rare earth production capacity, at which point Beijing loses this powerful card that it can play," he added.

This layered, strategic posture reflects Beijing's broader approach to international confrontation. "Beijing has also learned that the way to deal with Trump is not through submission or concessions, but through deterrence and negotiation," said Wen-Ti Sung, fellow at the Global China Hub, Atlantic Council.

The US rolled back some tariffs as part of a 90-day trade truce, but China did not lift its export controls. Instead, it announced a temporary reprieve for 28 American companies, offering relief but not resolution. This move kept Beijing's bargaining position while giving just enough ground to keep talks alive.

Ukraine's mineral riches and realities

On paper, Ukraine holds an estimated 5% of the world's total mineral resources, including 20% of the world's graphite, 7% of global titanium, and sizable deposits of lithium, gallium, and uranium.

It ranks among the top 10, globally, in key minerals like manganese, iron, and nickel, and was once a major supplier of titanium for the global defence sector.

But the difference is not in what sits beneath the soil; rather it lies in infrastructure, political stability and production capacity.

For all of the talk of Ukraine's mineral riches, the country does not actually produce any rare earths now, nor has it produced any supplies in recent decades, because years of war, underinvestment and political instability have left the sector underdeveloped, with scant geological data and little active mining in rare earths.

Nevertheless, US President Donald Trump viewed Ukraine's minerals as potential compensation for US aid during the war with Russia.

"I want them to give us something for all of the money that we put up. So, we're asking for rare earth and oil, anything we can get. We're getting our money back," Trump told reporters in Washington soon after taking office for his second term.

The Trump administration had demanded access to 50% of Ukraine's rare earth resources, framing it as part of a broader mineral deal tied to security guarantees. Ukrainian President Volodymyr Zelenskyy, however, rejected this framing outright.

"You cannot call this $500 billion and ask us to return $500 billion in minerals or something else. This is not a serious conversation," he said, pointing out that actual US aid amounted to $67 billion in weapons and $31.5 billion in budget support — far short of the exaggerated figure.

Despite speculation about an imminent agreement during the Munich Security Conference, no deal was signed. According to Zelenskyy, the draft agreement did not include the security guarantees Ukraine was seeking.

Meanwhile, US Treasury Secretary Scott Bessent claimed Zelenskyy had "assured me that he would be signing the minerals deal in Munich and he has not," revealing a fundamental disconnect between the two sides.

Ukraine possesses a vast amount of critical minerals that could reduce the West's dependency on China, yet it lacks the technical, logistical and political capacity to develop and trade them at scale.

Ongoing war with Russia has further constrained access to resource-rich regions like Donetsk and Dnieper-Donets — areas that account for 80% of the country's hydrocarbon reserves and a significant share of its coal and mineral wealth.

China's rare earth policy shows what Tom Özden-Schilling, assistant professor from the Department of Sociology and Anthropology at NUS, calls a "Longstanding government-led industrial policy."

Beijing has invested heavily not just in mining, but also in the expensive work of processing rare earths — a stage of the supply chain that most Western nations have avoided due to environmental and regulatory hurdles.

In contrast, Ukraine's mineral policy has been reactive, destroyed by war, and tied up in negotiations; it has little power to shape. Even the prospect of a resource-for-aid deal with the US became a political landmine rather than a diplomatic victory.

"Keeping [export controls] in place helps China maintain leverage in future negotiations," noted Dr Jost Wubbeke, managing partner at Sinolytics.

That leverage has allowed China to counter Trump's trade threats not by raising its voice, but by tightening its grip – a quiet, regulatory chokehold that sends a loud geopolitical message.

According to Cory Combs, Associate Director at Trivium China, "The US is still a decade away from securing rare earths independently from China."

Despite new investments in domestic mining and partnerships with allies like Australia and Canada, no country can match China's vertically integrated rare earth supply chain — at least not in the short term.

Ukraine could, in theory, become a future player. But that potential would require a decade or more of investment, peace, regulatory clarity, and international collaboration — none of which are currently guaranteed.

Meanwhile, Trump's transactional approach to diplomacy has brought few tangible outcomes in this domain. His expectation that Ukraine would exchange sovereignty over its natural resources for support has not only failed, but has deepened distrust. As Zelenskyy put it, "I cannot sell our state."

China, by contrast, has played a longer game, choosing not to sell but to signal. Its controls remain in place, not to halt trade, but to remind Washington who holds the key to the technologies of the future.