Sciences Po · AI-Assisted Analysis, KINT 6005 · group research project
Sovereignty
on paper?
China built its lead in rare earths with quotas, licences and bans. The West now answers with "economic sovereignty" policies. We ask whether any of these policies actually move trade, or only put a label on changes already under way.
Anna Carminati · Parth Piyush Prasad · Yury Koloskov · Pietro Ceccone
Nd and Pr make NdFeB magnets strong. Dy and Tb keep them working when hot, in motors and turbines.
Guess first
94%. Almost every powerful magnet in the world, the kind inside electric cars, wind turbines and fighter jets, is made in China.
And China holds only about 43% of the world's known rare-earth deposits. Geological conditions alone do not explain this. China's rare-earth strategy does.
Quiz source: IEA commentary "With new export controls on critical minerals, supply concentration risks become reality" (23 October 2025), 2024 data for all three answers; Weng, Jowitt, Mudd and Haque, "A detailed assessment of global rare earth element resources", Economic Geology 110(8), 2015, for the 43% of known deposits.
Beijing first justified its rare-earth controls as protecting the environment, then as national security. The monopoly never ended.
How Beijing justified the shift →Japan almost halved its direct dependence on Chinese magnets after 2010, from 65% to 36%. Counting one hop back, it still depends on China for 68%.
One hop away →China now imports more rare-earth compounds than it exports, and makes 94% of the world's permanent magnets.
The two monopolies →Why now. In April 2025, China answered Trump's tariffs by restricting exports of seven rare earths. In October, with the trade war still raging, it went much further and announced worldwide licence rules: a company anywhere in the world could need Beijing's permission to sell a product containing Chinese rare earths, even a car built in Germany. Three weeks later, Washington cut a tariff on Chinese goods to make the rules go away, and China agreed to pause them for one year. On paper, the pause was set to end on 10 November 2026; the two governments have agreed to stretch their truce to 10 January 2027, but Beijing has not formally extended the pause on these rules.
So what happens when it runs out? The West promises "economic sovereignty" over critical minerals. Is it real, or only on paper?
Executive summary
Why it matters. China controls most of the world's rare-earth refining and magnet production, and in 2025 it showed it would use that position: export licences in the middle of the tariff war with the United States, and wider controls whose suspension was set to end on 10 November 2026, inside a truce that runs to 10 January 2027. Western governments answer with plans for "economic sovereignty". We ask whether that sovereignty is achievable, and trace how China's own position changed along the value chain.
What we did. We combined bilateral trade data for six rare-earth product codes and a placebo (CEPII BACI, 1995–2024), 576 Chinese government documents read with text analysis (1999–2026), a list of 60 policy events (41 verified), and a what-if predictor that removes China's supply to a Western buyer and asks who could replace it. To build each page, we took a historical and critical approach: we read the data against primary sources such as official documents, WTO rulings and contemporary reporting, placing each figure in the context of the policies and events that shaped it.
What we found. First, Beijing presented its second monopoly as an environmental choice, then as a security one: environmental language peaked at 32% of its rare-earth framing in 2012–15, while it defended its export quotas at the WTO, and since 2023 security and export-control language has taken over; the monopoly itself never ended. Second, replacing China works on paper, not in practice. After China held back rare-earth shipments in 2010, Japan cut the share of magnets it buys directly from China from about 65% to 36%; but counting what it buys from countries that themselves depend on China, mostly Vietnam, its dependence is still about 68%, and rising again since 2021. Our predictor points the same way: other exporters already sell more than twice China's compound sales to the West, but 93% of that supply goes to Chinese refiners; for magnets, they could replace only about 13%, even on paper. Third, the monopoly moved up the chain: China has become a net importer of rare-earth compounds (since 2018, by weight) while making about 94% of the world's sintered permanent magnets (IEA, 2025).
What is new. The Western debate on rare earths rests on a few assumptions that the data seem to confirm: that buying from other countries means not depending on China, that other suppliers could replace China, and that sovereignty is a matter of political will. Read in context, the same data tell a different story, and the reality lies between the lines: much of the "non-Chinese" supply still depends on China, and becoming sovereign would cost the West far more than its plans admit.