In the contest of “chips choking the neck, rare earths choking the wheels,” recent customs data has stirred debate: in September, China’s rare earth exports rose 16% year-on-year, yet shipments to the U.S. fell to a historic low of 9.6%. Faced with this contrast, U.S. representatives visiting China bluntly admitted they were “puzzled.” The truth of this resource contest lies in the details of mines, refineries, and scrap recycling stations.
America’s “Breakthrough Strategy”: Spending Big but Stalled at the First Step
In an effort to break free from dependence on Chinese rare earths, the U.S. has taken frequent actions. The Department of Energy directly allocated $220 million to support companies like MP Materials and Lynas, aiming to build domestic refining capacity. But reality quickly poured cold water on the plan: soon after restarting California’s Mountain Pass mine, environmental groups sued over claims that “tailings dams threaten desert lizards.” Lawsuits arrived before production reports, instantly halting the restart.
This was not an isolated case. Rare earth refining requires strong acid and alkali treatment, with one ton of rare earth oxide producing about 2,000 tons of toxic waste. Under strict U.S. environmental standards, costs skyrocket. More critically, since abandoning rare earth refining in 1998, the U.S. would now need at least 15 years to rebuild its industrial chain, according to the Government Accountability Office.
Failing on its own, the U.S. turned to allies like Australia and Japan to form a “rare earth security circle,” targeting a tripling of key processing capacity by 2024. Yet it soon discovered that of Malaysia’s 22% share of global processing, more than half involves Chinese technology—with factory control panels still in Chinese. The so-called “de-China-ization” cannot bypass China’s technical barriers.
China’s “Initiative”: Full-Chain Control from Mines to Scrap
Behind U.S. anxiety lies China’s absolute dominance in rare earths. China controls 60% of global reserves and 90% of refining capacity. In August, the Ministry of Industry and Information Technology released draft “Rare Earth Management Regulations,” tightening lifecycle control.
The rules require an “ID card” for each rare earth mine, enabling full traceability from extraction to magnet processing. This means any illicit exports would be traceable. Furthermore, the heavy rare earth export license system, effective April 2025, has already forced several European and American factories to suspend operations due to license approval delays. These measures are part of the national security strategy enshrined in the Mineral Resources Law, not aimed at specific countries.
Even more decisive is the technological moat. Last year, China’s patents in rare earth recycling outnumbered the combined total of the U.S., Australia, and Japan by 73%. In Lianyungang, recycling plants already extract rare earths efficiently from old phones and hard drives, reviving NdFeB magnets with acid-leaching and extraction technology, processing up to 12,000 tons annually. Jiangxi has achieved a 95%+ recycling rate, effective even at low concentrations of 0.03 g/L. Mines may be depleted, but e-waste is endless—this is the true “infinite resource replica.”
Endgame: Who Can Master the Code of Turning Waste into Gold?
In the short term, this contest is a clash of “chips for time” versus “resources for space”: the U.S. relies on chip technology to buy time to rebuild supply chains, while China uses resource control to expand its development space. In the long term, however, the decisive factor lies in recycling technology.
With global demand for rare earths from EVs and defense industries steadily growing, China is simultaneously tightening raw export regulations while building a closed-loop recycling system. Even if the U.S. finds alternative sources, without refining and recycling capabilities, it will remain stuck downstream.
For ordinary people, this contest is not so distant. That old pair of earphones or discarded hard drive might one day become a frontline resource. With advanced recycling technology, these “wastes” could be worth far more than expected.
From protests in Manila to the rare earth industry’s shadow battles, the essence of international competition has always been control. While the U.S. struggles with mine approvals, China has already shifted from “selling resources” to controlling the chain and mastering technology—perhaps the very answer U.S. representatives “cannot figure out.”
