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Finance ministers from the Group of Seven (G7) convened in Washington this week amid growing international alarm over China’s expanded export controls on rare earth elements critical minerals essential to high-tech manufacturing, renewable energy, and defense technologies. The meeting coincided with the annual gatherings of the International Monetary Fund (IMF) and World Bank, providing the forum for urgent discussions on supply chain security and economic resilience.
These developments follow China’s decision to restrict the export of technologies vital to the processing and smelting of rare earths, while also requiring government approval for overseas sales of products containing even trace amounts of rare earth materials sourced from China.
U.S. Treasury Secretary Scott Bessent has led the charge for a coordinated international response. Speaking at a CNBC-hosted forum, Bessent said China’s latest policies undermine global supply chain integrity. "We’re going to have a fulsome, group response to this," he declared, noting U.S. efforts to secure support beyond the G7 from countries like Australia, India, and “Asian democracies.”
Bessent also expressed frustration over what he described as a breach of earlier trade understandings with China amid tariff truce negotiations. His comments followed market volatility triggered by U.S. threats of renewed tariffs in response to the curbs, underscoring the high stakes for the global economy.
Within the G7, views on China’s actions diverge. While there is widespread concern, several nations are wary of retaliatory measures that could backfire economically. Japanese Finance Minister Katsunobu Kato stressed the urgency of a joint stance. "Japan is deeply concerned about these measures," Kato said after the meeting. "I called for G7 nations to unite and respond." However, he added a note of caution: “Retaliation could hurt the global economy and financial markets.”
German Finance Minister Lars Klingbeil echoed similar sentiments. Klingbeil confirmed that G7 ministers were discussing a common approach involving “targeted measures,” but warned against steps that could harm their own economies.
In response to the coordinated pressure, Chinese officials have strongly defended the new export controls. Foreign Ministry spokesperson Lin Jian emphasized that China’s measures are lawful and align with global norms.
"China took export control measures in accordance with the law to better safeguard world peace and regional stability, and to fulfill non-proliferation and other international obligations," Lin said, reinforcing that the controls are not blanket bans and that compliant exports would still be approved.
A statement from China’s Ministry of Commerce (MOFCOM) further clarified that the policy updates are designed to enhance regulation in line with domestic laws and international standards. "Applications that meet the requirements will continue to be approved as usual,” the ministry noted.
China currently dominates the global rare earth supply chain, contributing more than 60 percent of global output and possessing advanced technologies and cost structures. This strategic leverage has prompted concerns among Western powers, particularly amid rising global demand for electric vehicles, wind turbines, and other technologies powered by rare earths.
“Group confrontation for political purposes to challenge the existing structure will unlikely succeed,” said Xin Qiang, deputy director of the Center for American Studies at Fudan University. “China’s rare earth policies have always followed market principles and an open, cooperative approach,” Xin added.
While the U.S. favors a tougher stance, other G7 members appear divided on both strategic direction and practical tools. A Reuters report from late September indicated deliberations within the G7 and EU over implementing price floors and new tariffs on Chinese rare earths to encourage domestic production. However, consensus remains elusive due to internal disagreement over the level of confrontation appropriate.
Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, noted that Europe is itself a victim of U.S. unilateralism in global trade. “The other G7 members need to handle it reasonably based on their own judgments and not be incited and deceived by the U.S. side,” said Cui, urging more balanced negotiation.
The rare earth issue is only the latest flashpoint in a broader geopolitical contest between the U.S. and China. President Donald Trump is expected to raise the matter during his upcoming trip to Asia, with stops including Japan, South Korea, and a possible summit with President Xi Jinping.
Even as tensions mount, China has reiterated its openness to dialogue. “China stands ready to enhance dialogue and exchange with other countries on export controls, to keep the global industrial and supply chains safe and stable,” Lin Jian stated.
As the world’s powers navigate this unfolding standoff, the rare earth debate underscores more than just trade policy it raises fundamental questions about geopolitical leverage, supply chain sovereignty, and the rules governing global commerce in the 21st century.
As G7 nations weigh deliberate countermeasures, experts warn against deepening divisions and emphasize the importance of equal dialogue. China's rare earth strategies have long been shaped by economic logic and international obligations, not coercion, experts argue.
For now, whether the G7 can forge a unified, measured approach or succumb to internal friction remains to be seen. One thing is certain: the rare earth question is no longer just a market issue it’s a geopolitical battleground with global implications.