China cracks down on illegal mining amid escalating US trade tensions

Business Standard

3 days ago

China, rich in critical minerals, is intensifying enforcement of stricter export regulations to maintain its global dominance in this vital sector. This move comes amid rising pressure from the United States, according to a report by the South China Morning Post.
As the world's largest producer of critical minerals, China supplies about 92 per cent of the refined rare earth elements used in consumer electronics, electric vehicles, and advanced defence systems. Under new export controls, companies must now obtain approval from Chinese authorities before shipping these minerals abroad.
Regions step up action against illegal mining in China
Provinces such as Guangxi Zhuang autonomous region, Guizhou, and Hunan have begun rigorous inspections of exporters and intensified crackdowns on illegal mining. These efforts align with Beijing's directive for tighter 'whole-chain' oversight of strategic mineral exports, according to the state-owned Securities Times.
Hunan province will identify all strategic mineral exporters and assist them in improving compliance, while Guangxi plans to step up supervision of mining activity and target unlicensed or unauthorised extraction.
In Guangxi and Guangdong, the cities of Wuzhou and Yunfu have established a cross-regional system to jointly combat illegal mining.
Stronger control follows US tech restrictions
China's moves come as it seeks to strengthen its grip on critical mineral supplies, a key bargaining chip in its complex relationship with the US. Recent US restrictions on jet engine and chip design technologies have further strained bilateral ties.
On May 12, China's Ministry of Commerce and other government bodies instructed local officials in mineral-rich regions to enhance control over every stage of the mineral supply chain. The government urged a 'preventive' strategy involving closer monitoring, improved information sharing, and tougher enforcement to curb illegal exports, the South China Morning Post reported.
US-China talks in Geneva fail to lift export curbs
Following US-China discussions in Geneva on May 10–11, Beijing was expected to lift export controls imposed on April 4 that require permits for seven critical minerals.
However, China has yet to confirm any rollback of these restrictions, prompting the US to accuse it of reneging on its Geneva commitments.
White House spokeswoman Karoline Leavitt said on Tuesday that US President Donald Trump and President Xi Jinping are expected to speak this week, with China's export limits set to feature prominently. She added that Washington is 'actively monitoring China's compliance with the Geneva trade agreement'.
US invokes Defence Production Act
In response, the US is preparing to ramp up domestic production of critical minerals. Reuters reported that President Trump intends to invoke emergency powers under the Defence Production Act to bypass some congressional funding requirements.
Diplomats, automakers, and business leaders from India, Japan, and Europe are reportedly seeking urgent meetings with Chinese officials to expedite approvals for rare earth magnet exports.
China's customs data showed that exports of permanent rare earth magnets to the US fell by 58.5 per cent year-on-year to 246 tonnes in April, reflecting heightened trade tensions.
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