China has launched a comprehensive monitoring system for its rare earth magnet sector, forcing manufacturers to disclose trade data and customer identities to government authorities, three sources told Reuters, amid broader restrictions that are choking global supply chains.
The digital monitoring platform became operational in recent days, compelling companies to file detailed reports through government channels, according to industry sources.
Beijing introduced licensing requirements in April for seven rare earth elements and related magnets. The approval process has created bottlenecks affecting automotive and technology manufacturers, forcing some to idle production facilities as material stockpiles dwindle.
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The heightened oversight indicates Beijing may permanently maintain restrictions on these strategic materials. China dominates global production of rare earths essential for electric vehicles, electronics and defense equipment.
“Our current hypothesis is that China would continue its export control mechanism on rare earths, as its an ace card for China to hold,” Tim Zhang, founder of Singapore-based Edge Research, told Reuters.
Chinese officials aim to establish oversight across the complete rare earth supply network while combating illegal extraction and tax violations, a source familiar with government planning said.
The controlled materials are vital for military technologies, including satellite systems, unmanned aircraft, and sophisticated weaponry. The US lacks domestic sources for heavy rare earth elements.
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