China’s Rare Earth Dominance Remains a Key Trump-Xi Negotiating Card Ahead of Shenzhen Summit

China's dominant position in the global critical minerals supply chain is expected to remain a major issue when U.S. President Donald Trump meets Chinese President Xi Jinping in Shenzhen next week, as Washington struggles to reduce its dependence on Chinese materials used in electric vehicles, semiconductors, robotics and military equipment.

Despite billions of dollars in U.S. government investment aimed at rebuilding domestic mining and processing capacity, many American projects remain years away from commercial production. The gap highlights the difficulty of challenging China's established position in an industry that requires not only access to mineral deposits but also sophisticated refining facilities, technical expertise and large-scale manufacturing infrastructure.

According to a Reuters investigation published on November 15, U.S. manufacturers remain heavily reliant on Chinese materials, giving Beijing considerable leverage in trade negotiations. The report said the dependence could limit Washington's ability to pressure China over tariffs and export controls without risking disruptions to its own industrial supply chains.

China's influence extends beyond the extraction of rare earth elements. The country has spent decades developing the processing and refining capabilities needed to turn raw minerals into magnets, chemicals and other components used in advanced manufacturing.

Rare earth elements are essential inputs for a wide range of products, including electric vehicle motors, wind turbines, consumer electronics and defence systems. Some specialised permanent magnets are particularly important because they provide strong magnetic performance while remaining relatively compact and lightweight.

The scale of the manufacturing gap is illustrated by neodymium-iron-boron magnets, which are widely used in electric vehicles and military equipment. According to figures from the International Energy Agency cited by Reuters, U.S. manufacturing capacity for these magnets was approximately 4,500 metric tonnes annually in 2025, compared with about 210,000 tonnes in China.

This difference demonstrates why building alternative supply chains is a long-term industrial challenge. Establishing a mine does not automatically create a complete supply chain. Companies also need processing plants, chemical facilities, specialised equipment, skilled workers and customers willing to qualify new materials for industrial use.

The Trump administration has supported several projects intended to strengthen U.S. access to critical minerals. These include investments in domestic magnet production, lithium development and the expansion of mining and refining operations.

However, many projects are not expected to reach full production until the end of the decade or later. Reuters reported that a major Tennessee refinery backed by South Korea's Korea Zinc is not expected to open until 2030, while several proposed North American mining projects are targeting production dates in the late 2020s or early 2030s.

China has previously used export restrictions on rare earth-related materials and magnets as a policy instrument. In 2025, restrictions disrupted operations at Ford Motor and other U.S. manufacturers, prompting Washington to negotiate continued access to certain supplies.

Beijing has said its restrictions are intended to prevent sensitive materials from being used in military applications. China has also criticised U.S. export controls targeting Chinese semiconductor companies, arguing that Washington is using national security concerns to restrict normal commercial activity.

The issue is expected to feature prominently in the November 19 meeting between Trump and Xi, which will take place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting in Shenzhen.

The two governments may also discuss extending their existing trade truce, which is scheduled to expire in January and includes export-control waivers covering certain critical minerals.

For Washington, the challenge is to balance pressure on Beijing with the need to maintain access to materials required by American manufacturers. For China, its established industrial position provides negotiating leverage, although restrictions could also encourage other countries to accelerate diversification efforts.

The coming years will therefore test whether U.S. investment can create a competitive alternative to China's mineral-processing ecosystem. Until new mines, refineries and manufacturing facilities become operational at scale, China's role in the global critical minerals supply chain is likely to remain difficult to replace.