China Tightens Grip on Rare Earth Magnets with New Tracking System

China, the world's dominant supplier of rare earth magnets, has implemented a new national tracking system to monitor its rare earth magnet sector, intensifying scrutiny as export restrictions disrupt global supply chains.

The system, effective as of last week, mandates producers to submit detailed information, including trading volumes and client identities, through an online platform.

This move underscores China's strategic control over rare earth elements, critical for industries ranging from electric vehicles to semiconductors, as global automakers face production halts due to supply shortages.

Export Restrictions Reshape Global Supply Chains

In early April 2025, China introduced export controls on seven medium- to heavy rare earth elements and several magnet types, requiring exporters to secure licenses. Delays in obtaining these licenses have caused significant disruptions, with some automakers halting production lines as reserves dwindle.

The tracking system, initially outlined in June 2024, aims to enhance Beijing's oversight of the rare earth sector, which accounts for approximately 90% of global magnet production.

This development has raised concerns among international stakeholders hoping for a relaxation of restrictions following trade discussions in Geneva last month.

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Strategic Implications and Long-Term Goals

The tracking system suggests that China's export controls could become permanent, thereby strengthening its near-monopoly on the production of rare earth magnets. Analysts suggest that Beijing aims to monitor the entire rare earth production chain, from mining to final products, to curb illegal activities such as smuggling and tax evasion.

Tim Zhang, founder of Singapore-based Edge Research, noted that rare earths are a critical leverage point for China in global trade dynamics. The system is expected to offer comprehensive information about coal production and trade, strengthening China's regulatory grip on this vital resource.

Did You Know?
Rare earth magnets, made from elements like neodymium and dysprosium, are essential for high-performance applications, powering everything from wind turbines to medical imaging devices.

Global Impact and Industry Response

The industries that rely on rare earth magnets, such as automotive, renewable energy, and electronics, have been affected by the tightened controls. Companies are exploring alternative sources due to the already strained global supply chains, but non-Chinese production remains limited.

Historical trends show that after initial export curbs, China's metal exports often rebound as licenses are issued. However, the current tracking system suggests a more sustained approach to control, prompting industries worldwide to reassess their reliance on Chinese rare earths.