China's critical minerals weaponisation: Why countries are growing wary
Synopsis
China controls 90% of global rare earth processing — and it is using that dominance as geopolitical leverage. A new report reveals how Beijing's export controls rattled the US and Europe, while its strategy in Malaysia and Indonesia signals an ambition to remain an indispensable gatekeeper of the global critical minerals industry, not just a dominant producer.
Key Takeaways
China controls approximately 90 per cent of global rare earth processing and refining capacity, giving it leverage over the US and its allies.
Beijing deployed rare earth export controls last year in response to US President Donald Trump 's tariffs, catching Western governments off-guard.
China's strategy has evolved from domestic dominance to controlling global access to rare earth technology, technicians, and market access.
Malaysia has banned exports of unprocessed rare earths; China reportedly aims to remain an indispensable participant in its processing sector rather than cede influence to Western rivals.
Indonesia identified eight prospective blocks of rare earths and strategic minerals in February 2026 , signalling growing ambitions in the sector.
Countries including India are accelerating efforts to build alternative supply chains, though China's processing lead means diversification timelines span years.
As nations, including India, accelerate efforts to secure alternative rare earth sources and reduce their dependence on China, a growing number of governments are becoming wary of Beijing's deliberate weaponisation of critical minerals, according to a report by World Politics Review. The findings underscore a structural vulnerability that runs through the global supply chains of advanced technology, defence equipment, and clean energy hardware.
China's Stranglehold on Rare Earth Processing
China controls roughly 90 per cent of global processing and refining capacity for rare earths — a dominance that gives it considerable leverage over the United States and its allies. Last year, Beijing demonstrated the reach of that leverage when it rolled out rare earth export controls in direct response to US President Donald Trump's tariff escalation. The move was widely read as a calibrated signal, not merely an economic countermeasure.
The World Politics Review report cautioned that 'The United States and Europe have been caught flat-footed in recent years by China's actual and threatened use of export controls over critical minerals and related magnets.' Some Western officials have gone further, reportedly accusing Beijing of a 'decades-long scheme to place a boot on the neck of the global economy' — a characterisation that reflects the depth of alarm within allied capitals.
China's Ambitions Move Beyond Domestic Dominance
Beijing's strategy has shifted in scale and ambition. Its objective, analysts now argue, is no longer confined to dominating rare earth production within its own borders; it is increasingly aimed at controlling the global industry by determining which countries receive the technology, skilled technicians, and market access needed to become credible competitors. This represents a qualitative escalation from supply-side control to a broader gatekeeper role.
Jack Lifton, Co-Chair of the Critical Minerals Institute (CMI), highlighted in a recent article in Investor News that China's approach to Malaysia and Indonesia offers clear evidence of this new policy direction.
The Malaysia and Indonesia Playbook
Malaysia has prohibited exports of its unprocessed rare earth material, prioritising domestic value addition while simultaneously welcoming both Chinese and non-Chinese investment. Its non-Chinese industrial base has grown more formidable as a result. However, according to Lifton, China's goal is not to see Malaysia emerge as a Western or Japanese-sponsored rival — rather, Beijing wants Malaysia to become a 'multi-aligned processing centre in which China remains an indispensable participant.'
Indonesia presents a different picture. The country is keen to develop its rare earth resources, but publicly available evidence of a major, dedicated Chinese rare earth separation or magnet project there remains limited. Notably, in February 2026, Indonesia announced it had identified eight prospective blocks containing rare earths and other strategic minerals, signalling its intent to become a significant player in the sector.
What This Means for India and Its Allies
For India — which has its own substantial rare earth deposits but limited processing capacity — the global race to build alternatives to Chinese supply chains presents both an opportunity and an urgency. This comes amid broader efforts by the Quad, the G7, and bilateral supply-chain partnerships to establish China-independent rare earth corridors. The scale of China's processing dominance means that even ambitious diversification timelines are measured in years, if not decades.
How quickly allied nations can operationalise alternative supply chains will define the terms of technological competition well into the next decade.
Point of View
Not just commercially. What is often missed in mainstream coverage is the subtlety of China's Malaysia play: it is not trying to block Western investment, it is trying to ensure that whatever processing hub emerges, China stays at the table. For India, which has deposits but lacks refining scale, the window to build sovereign capacity with allied support is narrowing as Beijing works to lock in its indispensable-participant status across Southeast Asia.
NationPress
15 Oct 2026
Frequently Asked Questions
Why are countries worried about China's control over critical minerals?
Countries are worried because China controls approximately 90 per cent of global rare earth processing capacity, giving Beijing the ability to restrict supply as a geopolitical tool. It demonstrated this leverage last year when it imposed rare earth export controls in response to US tariffs, catching Western governments largely unprepared.
What are rare earths and why do they matter?
Rare earths are a group of 17 metallic elements essential for producing advanced technologies including electric vehicles, wind turbines, semiconductors, and defence systems. Because China dominates their processing and refining, any disruption to Chinese supply has cascading effects on global technology and clean-energy supply chains.
What is China's strategy in Malaysia and Indonesia regarding rare earths?
According to the Critical Minerals Institute's Jack Lifton, China wants Malaysia to become a multi-aligned processing centre where Beijing remains an indispensable participant, rather than allowing it to become a rival backed by Western or Japanese capital. In Indonesia, which announced eight prospective rare earth blocks in February 2026, China's dedicated presence is less established but its interest is growing.
How does this affect India?
India, which has its own rare earth deposits but limited domestic processing capacity, is among the countries working to reduce dependence on Chinese supply chains. The global push for alternative corridors — through Quad partnerships and bilateral deals — directly involves India, though closing the gap with China's processing dominance will take years.
What did the World Politics Review report say about Western preparedness?
The report warned that the United States and Europe have been caught flat-footed by China's actual and threatened use of export controls over critical minerals and related magnets. Some Western officials have gone further, reportedly describing Beijing's approach as a decades-long scheme to exert control over the global economy through mineral dominance.
