China shipped fewer rare earths in the first half of 2026 but earned dramatically more for them, and customs figures reported Monday reveal how Beijing’s licensing wall, backed by a new enforcement campaign, is converting geology into leverage over Europe, Japan and the wider world.
BEIJING, July 20, 2026. China is selling fewer rare earths and getting paid far more for them. Detailed trade tables from the General Administration of Customs, reported Monday by Asian News International, show that the export value of Chinese rare-earth ore and metals surged 61.1 percent year on year in the first half of 2026, reaching 308.269 million dollars, even as shipment volumes fell 6.4 percent to 30,482.8 tonnes. The figures, part of the customs agency’s breakdown of major exports by quantity and value for June, provide the clearest statistical portrait yet of a policy that has moved from paper to practice: an export licensing regime that meters the flow of strategically vital minerals, now reinforced by an enforcement apparatus that reaches from Shanghai boardrooms to whistleblower hotlines.
The numbers landed at the end of a week in which the stakes of that policy were spelled out in trillions. On July 16, the International Energy Agency warned in its latest Critical Minerals Outlook that full implementation of China’s rare earth export curbs could jeopardize 6.5 trillion dollars in downstream production outside the country, with the automotive, high-tech, defense and energy sectors most exposed. And the data arrived less than three weeks after Beijing switched on a formal public reporting mechanism for export control violations involving strategic minerals, a measure that lawyers say will multiply the eyes watching every shipment that leaves a Chinese port.
Taken together, the July developments sketch a coherent strategy. China is not cutting the world off from rare earths. It is deciding, tonne by tonne and license by license, who gets them, in what form, at what price, and under what conditions.
Fewer Tonnes, Fatter Invoices
The half-year customs figures reward close reading. According to the data reported by ANI on July 20, China exported 30,482.841 tonnes of rare-earth ore and metals between January and June 2026, down from 32,569.28 tonnes in the same period of 2025. In June alone, shipments totaled 5,104.838 tonnes valued at 64.644 million dollars.
The value line is where the story lives. Export earnings of 308.269 million dollars in the first half compare with 191.299 million dollars a year earlier, the 61.1 percent jump that headlined the ANI report. Arithmetic on those figures implies an average realized price of roughly 10,100 dollars per tonne in the first half of 2026, up from about 5,900 dollars a year before, an increase of about 72 percent. The June figures imply an even richer mix, at approximately 12,700 dollars per tonne.
Global Times, which first reported the volume decline on July 14 citing the customs administration, framed the drop against what it called Western efforts to “build small circles” on critical minerals. The state-run paper noted that Japanese Prime Minister Sanae Takaichi had raised concerns at a recent Group of Seven summit session that China’s export restrictions could affect the supply chains of the G7 and like-minded nations.
Analysts caution against reading the modest aggregate volume decline as evidence that supply is holding up. Rare Earth Exchanges, a US-based industry intelligence platform, argued in a July 14 assessment that the customs category labeled rare earths is too broad to reveal what matters. The category does not distinguish light rare earths from heavy ones, nor identify specific oxides, metals, alloys or downstream products. Since Beijing tightened export controls, the platform reported, exports of critical heavy rare earths, including dysprosium, terbium and yttrium, “have fallen far more sharply than aggregate customs data suggest,” creating significant shortages for manufacturers in Japan, Europe and North America. Its advice to investors was blunt: watch the licenses, not the tonnes.
That framing matters because China’s dominance is not primarily about ore. The country controls the bulk of global separation capacity, metallization, alloy production and permanent magnet manufacturing, the chokepoints through which nearly every electric motor, wind turbine and guided munition outside China must eventually pass.
The Enforcement Turn
What distinguishes the summer of 2026 from earlier phases of China’s export control buildout is enforcement. The rules are no longer just being written. They are being policed, visibly and with teeth.
On June 24, the Ministry of Commerce published Announcement No. 26 of 2026, which formalized a public reporting mechanism for violations of strategic mineral dual-use export controls. The measure took effect July 1. According to an analysis by the law firm Morgan Lewis published the same day, the scope of reportable conduct is sweeping: exporting controlled items without a permit, disguising controlled items by modifying them or disassembling them into components, routing exports through third countries to dodge controls, transferring controlled technologies through investment, exhibitions, joint research or consulting, and even providing logistics, customs brokerage, e-commerce or financial services in support of unlawful exports.
Two provisions stand out to compliance professionals. First, the mechanism deputizes the public: employees, competitors and business partners can now report suspected violations, with voluntary self-disclosure treated as a mitigating factor and malicious false reporting subject to penalty. Morgan Lewis wrote that the practical effect is to “significantly increase the likelihood of detection” beyond what government inspectors alone could achieve. Second, the announcement designates as reportable conduct the unauthorized acceptance of foreign government requests for access, on-site verification or similar activities related to strategic mineral export controls, a clause that could put multinational subsidiaries in China in a legal vise when home-country regulators come asking questions.
The new hotline follows a string of enforcement actions that have rattled boardrooms in China and abroad. On June 18, a Chinese precision optics company with a market capitalization of roughly 11.7 billion yuan disclosed that its chairman had been placed under compulsory measures by the Shanghai Customs anti-smuggling bureau. The alleged offense, per the Morgan Lewis account, was declaring exported lenses containing germanium as ordinary optical glass to sidestep licensing requirements. Customs investigators reportedly went back through approximately three years of the company’s export records.
The reach extends to foreign nationals. In late June, the Japanese government confirmed that two Japanese citizens employed by a major Japanese company had been detained in Dalian in May on allegations of smuggling goods subject to export restrictions, reportedly involving rare-earth-related items. Morgan Lewis called it one of the first known instances of foreign nationals being detained in China in connection with an alleged export control violation involving such items, and a signal of “a more active and visible enforcement posture in the strategic minerals area.”
The enforcement statistics point the same direction. According to an analysis by the Andersen Institute, reported rare-earth-related customs cases in China rose from 91 to 317 in 2025, a more than threefold increase in a single year.
How the Licensing Wall Went Up
The architecture now being enforced was assembled in stages. In April 2025, China imposed export controls on seven medium and heavy rare earth elements and related products, a move the IEA notes forced some automotive producers outside China to temporarily halt production lines. Germanium and related items, controlled since 2023, were folded into a unified Dual-Use Items Export Control List under MOFCOM Announcement No. 51 of 2024, effective December 1 of that year.
The most dramatic escalation came on October 9, 2025, when MOFCOM’s Announcement No. 61 extended controls to foreign-made products containing Chinese-origin rare earths, an assertion of extraterritorial jurisdiction that stunned trading partners. Beijing subsequently suspended implementation of the October package for one year, until November 10, 2026, according to regulatory tracking by China Briefing and the compliance consultancy CIRS. The suspension bought time, but the IEA emphasized in its July 16 report that the vulnerabilities remain, since the legal machinery sits ready to be reactivated.
Alongside the sticks, Beijing has offered carrots, chiefly to Europe. In December 2025, MOFCOM confirmed it had begun issuing general licenses, longer-term permits allowing repeated shipments to pre-approved buyers, replacing the transaction-by-transaction approvals that had throttled deliveries. “With the accumulation of relevant export compliance experience, some exporters have initially met the basic requirements to apply for general licences,” ministry spokesman He Yadong said at a Beijing press conference on December 18, as reported by the South China Morning Post. “To my knowledge, some Chinese exporters’ applications for general licences have already been received and approved.”
Beijing has also pointed to a so-called green channel for license applications covering exports to the European Union, according to coverage by China Briefing, though European industry says the practical effect on processing times remains difficult to verify.
The rare earth regime does not stand alone. It is one instrument in a broader, increasingly assertive Chinese trade policy toward partners other than the United States. In February 2026, MOFCOM concluded its anti-subsidy investigation into EU dairy, imposing five-year countervailing duties of 7.4 percent to 11.7 percent on certain cheeses, milk and cream, as reported by Caixin Global and MLex. That followed definitive anti-dumping duties on EU pork in December 2025. And in June 2026, China secured the establishment of a WTO dispute panel against India over tariffs on information technology goods and local-content incentives for solar products, after New Delhi blocked a first request in May, according to the WTO Secretariat. The message across files is consistent: Beijing is willing to litigate, retaliate and regulate on multiple fronts simultaneously.
Brussels, Tokyo and the Diplomacy of Dependence
For Europe, the rare earth question has been institutionalized. On June 29 and 30, Commerce Minister Wang Wentao and European Commission Executive Vice President Maros Sefcovic formally launched the China-EU Trade and Investment Consultation Mechanism in Brussels, a permanent ministerial forum with four standing workstreams covering trade and investment balance, export controls, intellectual property and WTO reform, according to Xinhua and trade press accounts. Both sides noted what Xinhua described as positive results from the bilateral export control dialogue on rare earths and other critical minerals, agreed to a joint trade monitoring arrangement, and committed to reconvene at ministerial level in autumn 2026.
Wang assured his counterparts that existing export limits would not affect EU supply chains, according to reporting on the talks carried by Yahoo News and industry outlets. European officials remain cautious. Speaking to Bloomberg in December, when the first general licenses began to flow, Sefcovic captured the ambivalence: “We are getting initial reports from our industry that they are getting these general licences but we need to have a little bit more granular information to evaluate the whole process.”
Tokyo’s experience has been harsher. Beginning in January 2026, China tightened controls on dual-use exports involving certain Japanese entities and military end uses, with what Morgan Lewis described as practical effects on rare-earth-related supply chains. Chinese Foreign Ministry spokesperson Lin Jian confirmed the policy’s intent at a June 18 press conference, saying, per Global Times, that China has banned the export of all dual-use items to Japanese military users and for Japan’s military use, with the stated aim of containing what Beijing calls Japan’s remilitarization.
Lin coupled the confirmation with a broadside at the G7’s efforts to coordinate alternative supplies. “We urge the G7 to earnestly observe the principles of market economy and international trade rules, and stop disrupting the international trade order with the self-made rules of a small group,” he said, according to Global Times. China’s position on keeping global critical mineral supply chains safe and stable has not changed, Lin added, and all parties share responsibility for that outcome.
Japanese industry is improvising. Global Times reported this month on a first-of-its-kind Japanese initiative to recycle rare earth elements from household air conditioners, a scheme Chinese analysts quoted by the paper dismissed as unfeasible and revealing of Japan’s weak points. The dismissiveness is telling: Beijing evidently believes recycling and substitution will not dent its position anytime soon.
Washington remains part of the backdrop, though the sharpest edges of that relationship are governed by separate arrangements, including a suspension of China’s December 2024 export prohibition on gallium, germanium, antimony and superhard materials to the US market that runs until late November 2026, per Fastmarkets. Writing in The Wall Street Journal this month, White House trade adviser Peter Navarro argued that “China built its leverage by making the world believe it was the sole supplier,” a line quoted by Semafor in its coverage of the IEA findings. But the IEA’s warning was pointedly global, and nearly half of the modeled economic exposure falls on the United States and Europe combined, which means the other half falls everywhere else.
Counting the Exposure
The IEA’s July 16 report is the most comprehensive attempt yet to price the world’s rare earth dependence. The Paris-based agency calculated that full implementation of China’s curbs, including the suspended October 2025 measures, could put 6.5 trillion dollars of downstream production outside China at risk, according to its Critical Minerals Outlook as reported by The National and Semafor. The automotive, high-tech, defense and energy sectors top the vulnerability list.
“Our latest analysis shows that vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable,” IEA Executive Director Fatih Birol said in remarks accompanying the report, as quoted by The National.
The agency’s arithmetic extends beyond rare earths. “If battery-grade graphite trade were fully disrupted, over $300 billion per year of downstream production outside China would be at risk,” the IEA said, adding that the developments “underscore how small volumes of critical minerals underpin vast economic value and highlight the fragility” of concentrated supply chains.
The report also documents a troubling investment signal: spending on critical minerals development fell 9 percent in 2025, ending several consecutive years of growth, as price volatility and geopolitical tension chilled capital. Western public financing commitments for new projects have more than quadrupled between 2023 and 2025, reaching 65 billion dollars, but mines take a decade to build and separation plants nearly as long. As a bridge, the IEA recommended a multilateral stockpiling effort covering 11 high-risk materials, estimating the cost to countries other than the dominant supplier at about 900 million dollars, which it called modest relative to the potential cost of disruption.
Geopolitical shocks have already stress-tested the system this year. The closure of the Strait of Hormuz during the Middle East conflict disrupted flows of aluminium, sulphur and helium, the IEA noted, and roughly half of global seaborne sulphur trade transits the strait. Sulphur is the feedstock for sulphuric acid, essential to processing copper, lithium, cobalt, nickel and rare earths. When regional supply tightened, China curbed its own sulphuric acid exports in May, a move the IEA said created ripple effects across mineral and fertilizer value chains. The episode demonstrated how quickly Beijing will husband processing inputs when its domestic industry is squeezed, and how a single chokepoint can cascade through several others.
Against that backdrop, the price signal in Monday’s customs data reads less like inflation and more like rent. China’s exporters are capturing scarcity value that the licensing system itself creates, and the 61.1 percent revenue jump on falling volumes suggests foreign buyers are paying it without much resistance, because for heavy rare earths and finished magnets there is, for now, nowhere else to go.
What Importers and Exporters Should Expect
For companies that buy, sell, ship, finance or insure strategic minerals touching China, the practical consequences of the enforcement turn are already visible in daily commerce.
Chinese suppliers, facing personal criminal exposure for misclassification, are becoming markedly more conservative. Morgan Lewis advised clients to expect “more rigorous end-use and end-user certification requirements,” additional documentation demands, and outright refusals to transact where compliance risk looks elevated. Foreign buyers, the firm noted, are receiving significantly more detailed due diligence questionnaires from Chinese exporters, probing business operations, customers and intended product uses, information many companies consider proprietary. The uncomfortable choice is between disclosure to a Chinese counterparty operating under Chinese law and disruption of supply.
The whistleblower mechanism raises the stakes of every workaround. Transshipment through third countries, disassembly of controlled items into components, and creative tariff classification, the traditional gray-market responses to export controls, are now specifically enumerated as reportable conduct, and any disgruntled employee or losing competitor can trigger an investigation. The extraterritorial dimension compounds the risk: because China asserts jurisdiction over China-origin rare earth material wherever it travels, a magnet trader in Rotterdam or a components maker in Nagoya can find itself inside the perimeter of Chinese law without ever signing a Chinese contract.
For European industry, the near-term picture is a managed dependence with a diplomatic safety valve. The general licenses and the green channel have eased the acute shortages of mid-2025, and the new consultation mechanism gives Brussels a standing table at which to raise problems before they become stoppages. But the asymmetry is unmistakable: access flows from Beijing’s discretion, reviewable license by license, and the autumn ministerial will convene with the suspended October 2025 measures hanging over the agenda.
For Japan, the outlook is tougher still. The January measures embed a security logic that commercial diplomacy cannot easily unwind, and the Dalian detentions have added personal risk to corporate exposure. Japanese manufacturers of motors, sensors and precision optics, which sit closest to the controlled heavy rare earths, face the sharpest squeeze, and the recycling initiatives now being floated are years from meaningful volume.
For producers outside China, the customs data is, perversely, a business case. Prices implied by the export figures, up roughly 72 percent per tonne year on year, improve the economics of every non-Chinese separation plant and magnet line on the drawing board. The IEA’s 65 billion dollar public financing figure suggests governments have absorbed that lesson, even as the 9 percent decline in overall investment shows private capital remains skittish.
The Road to November
Three dates now organize the calendar of everyone in this trade. The first is the autumn 2026 session of the China-EU consultation mechanism, where Brussels will press for predictability in licensing and Beijing will press for concessions on the EU’s own trade defense measures. The second is November 10, 2026, when the suspension of China’s extraterritorial October 2025 rare earth controls expires unless renewed. The third is late November, when the parallel suspension of export prohibitions to the US market lapses.
Between now and then, the data will keep score. If the second half of 2026 repeats the first, China will have demonstrated that it can shrink physical exports, grow revenue, discipline its own exporters, detain foreign violators, and still keep enough product flowing to prevent its customers from justifying a full-scale break. That is a delicate equilibrium, and Monday’s customs tables suggest Beijing is, for the moment, holding it.
The IEA’s Birol offered the sober summary: enormous economic value now rests on small volumes of material moving through highly concentrated channels. In the first half of 2026, those channels narrowed by 6.4 percent, and the toll for passage rose 61.1 percent. Scarcity, engineered and enforced, is paying.