China’s Rare Earth Export Spike Signals Softening Stance, Sparks India’s Policy Push

Beijing, July 14, 2025: There was a critical increase of almost 32% in the Chinese exports of rare earths to the US in June, indicating a truce in the ongoing trade dispute. This also shows a broader thaw in U.S.-China trade tensions, with businesses accelerating shipments ahead of a fragile tariff deadline on August 12. This increase in exports would be critical for various US manufacturers who had paused production lines due to magnet shortages.

The rare-earth surge helped lift overall goods exports to 5.8% growth in June and drove China’s trade surplus further to US$114.7 billion. The surge follows a series of agreements between Washington and Beijing in June aimed at resuming the flow of rare earths, after China imposed export controls in April. These restrictions, implemented during a peak in trade tensions, had caused significant supply disruptions, even halting production at certain car manufacturing plants globally.

Impact on India

This development is expected to impact different Indian sectors positively. India’s EV and electronic sectors were hit by the April export freeze, and this update would result in easing immediate shortages (but would not reduce long-term dependence as India imports more than 90% rare earths from China). India has initiated a ₹1,345 crore plan to build local rare-earth magnet production capabilities in Hyderabad to reduce long-term dependence on Chinese rare earths.

The entire episode points out India’s desire to transition from a resource-dependent economy to a supply-chain node, possibly changing alliances with non-China suppliers.

Export Volumes Rebound Strongly

According to customs data released Monday, China exported 7,742.2 metric tonnes of rare earths in June, up from 5,864.6 tonnes in May. This marks a 60% increase from June 2024, when exports stood at 4,829 tonnes. In the first half of 2025, total exports reached 32,569.2 tonnes, compared to 29,095.2 tonnes in the same period last year.

However, the data remains indicative rather than conclusive. It does not specify which types of rare earths were exported, some of which may not have been affected by the earlier restrictions. A more detailed breakdown is expected on July 20.

Gradual Flow Restoration

While carmakers have reported that rare earth supplies are beginning to resume, they cautioned that flows are not yet back to pre-restriction levels. Meanwhile, Chinese officials have stated that Europe’s regular demand for these materials can now be met, reflecting Beijing’s intention to stabilise global trade flows following a volatile period.

Rare earths, comprising 17 key minerals, are crucial to a wide range of industries, including electric vehicles, consumer electronics, and defence applications. As the world’s largest producer, China’s export policies have a substantial impact on global industrial production and supply chains.

The latest trade data offers a glimmer of relief for global manufacturers, though the upcoming detailed classification will be closely watched for confirmation of a broader recovery in rare earth shipments.

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