Can Western Supply Chains Catch Up with China’s Rare Earth Machine?

New restrictions. New pauses. New strategic promises. But can the West actually build a rare earth supply chain strong enough to challenge China’s industrial dominance?

In his latest analysis for The Gaze, Bohdan Popov, Head of Digital at United Ukraine Think Tank, argues that Beijing’s temporary suspension of its toughest rare earth export restrictions is not a retreat, but a calculated tactical pause designed to test how quickly Western economies can reduce their dependence on Chinese critical minerals.

Following the Xi–Trump trade truce, China froze for one year the implementation of its harshest October 2025 export controls on rare earth elements, magnets, and processing technologies. But as  Popov notes, the legal architecture behind those restrictions remains fully intact – including mechanisms that extend Chinese export controls beyond its borders and maintain strict barriers for defense-related end users.

“The tactical nature of the pause is well illustrated by the pace and scale of funding that the United States, Australia, Canada, Japan, and the European Union are directing into rare earth processing and the magnet link of the supply chain,” the expert stressed.

Western governments have already begun mobilizing significant resources. The United States has expanded Pentagon-backed investments into domestic rare earth production, Australia is funding major refining projects, Japan is deepening supply diversification partnerships, and the European Union is advancing its Critical Raw Materials Act to reduce dependence on single suppliers.

Yet the structural imbalance remains severe. “Despite the powerful Western investment push, a realistic assessment of the horizon to 2028 indicates that even under an optimistic scenario, China’s share of global rare earth separation will decline by only approximately 90 to 75 per cent, while its share in the magnet link will remain near-monopolistic,” Popov stated.

The broader concern is strategic rather than purely economic. Rare earths are no longer simply industrial commodities – they are becoming instruments of geopolitical leverage in the intensifying global competition over critical technologies, defense manufacturing, and industrial sovereignty.

“If, by November 2026, the Western part of the system cannot convert announced projects into commercial deliveries of heavy rare earth elements and finished magnets, the restoration of the full restrictions regime will find the West in a state only marginally better than the starting point from which Beijing launched its October 2025 escalation,” Popov concluded.