China weaponizes rare earths again: markets tremble

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Markets

What to know:

  • China has imposed new export controls on rare earth materials, affecting global supply chains and market sentiment.
  • The restrictions require foreign companies to obtain licenses for products containing Chinese-origin rare earths, impacting semiconductors, AI, and defense industries.
  • This move could disrupt global supply chains and increase prices.

Markets, like a crowd huddled in winter, murmur of a wind that smells of metal and new laws. On Thursday, a quiet thunder rolled across the room where the world trades its breath, and the earth revealed its hidden wealth once more-rare earths, the unassuming kings of many a gadget and gun.

China stepped up rare earth export controls on Thursday in a rare move that could have widespread implications for global supply chains and both traditional and crypto market sentiment. The news lands as if someone whispered into the gears of a clock and the clock began to sweat.

China’s Ministry of Commerce announced sweeping new export restrictions on rare earth materials, processing technologies and derivative products used in semiconductors, AI systems and defence. A parchment of rules unfurls, dense with the gravity of things that never sleep: minerals, machines, minds and missiles.

The new rules, set to take effect on Dec. 1, will require foreign companies exporting products containing Chinese-origin rare earth elements or related technologies – including those outside China – to obtain a dual-use license from the Ministry of Commerce (MOFCOM). A license, they say, is merely a door; yet doors have hinges that creak and reveal who stands outside when the lights go down. 🔒

This is a major escalation as China dominates the global production of rare earths, which are essential in everything from everyday electronics to fighter jets. Potential supply chain constraints from this move could dent risk sentiment, particularly in AI stocks, and lead investors to hedge portfolios. A potential risk-off in AI stocks could spillover into the crypto market. 😅

“China just weaponized rare earths – again, but this time globally,” geopolitical strategist Velina Tchakarova said on X, as if naming a storm that travels without a ship. 🤨

“The move effectively gives Beijing a veto power over parts of the global chip, EV, and defence supply chains, including those operating outside its territory. Licenses will be denied for military or AI-related uses, notably 14nm chips, 256-layer memory, and military-grade AI systems,” she added.

According to Tchakarova, the new rules could cause supply disruptions across EVs, turbines and semiconductors, resulting in price rises. The air grows heavy with numbers and forecasts, and the price tags feel the weight of a winter moon.

The latest move is likely to provide Beijing with leverage in trade talks with the U.S.. It comes ahead of an expected meeting between Chinese President Xi Jinping and President Donald Trump on the sidelines of the APEC summit in South Korea later this month. A chessboard, then, with pieces gliding on ice, each move watched by markets that never sleep, and by dreams of a calmer morning that might never come. 🤫🧭

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2025-10-10 13:24