Satisfactory, But Not Excellent: China's Rare Earth Truce Enters Its Final 10 Weeks With Beijing Still Testing the Limits

Introduction

The price tag on a kilogram of terbium oxide in a European procurement office this past August was roughly $4,500. Twelve months earlier, before Beijing imposed its April 2025 export licensing regime and then threatened a far broader second wave in October, the same kilogram cost a fraction of that. In warehouses from Hamburg to Nagoya, purchasing managers who spent most of their careers treating rare earths as an afterthought have spent the better part of a year paying a premium that, as one analyst put it, reflects not tightening fundamentals so much as the emergence of a dual market shaped entirely by geopolitics.

The truce that arrested the worst of that spiral was struck in Busan, South Korea, in November 2025, when Washington agreed to roll back tariffs and Beijing suspended implementation of six sweeping MOFCOM announcements that would have extended Chinese export controls deep into foreign manufacturing supply chains. It was framed as a de-escalation, a pause in hostilities, and in narrow technical terms it was exactly that. But as of September 4, 2026, fewer than 70 days remain before that suspension expires on November 10, and the pause is beginning to look less like a resolution than a ceasefire with a clock on the wall.

In the months since the truce took hold, Beijing has added 10 U.S. defense-sector companies to its export control blacklist, targeted 14 European entities including German defense manufacturer Rheinmetall, and continued to run the April 2025 licensing regime on seven critical rare earth elements without interruption. Treasury Secretary Scott Bessent, asked in May about the prospects of renewal, chose his words with the careful economy of a man who understood their weight: China, he told Reuters on the sidelines of a G7 finance meeting in Paris, had been 'satisfactory, but not excellent' in its fulfillment of the critical minerals side of the agreement. Washington, he added, was 'not in a rush to extend it.' What follows from that assessment, and what it means for the industries whose survival depends on what Beijing decides to do in November, is the question that now concentrates minds from Tokyo to Brussels to Mountain Pass, California.

The Architecture of the Truce, and What Was Never Actually Paused

To understand what expires in November, it helps to be precise about what was, and was not, suspended in the first place. On November 7, 2025, China's Ministry of Commerce and the General Administration of Customs issued Announcement No. 70 of 2025, which suspended six announcements issued on October 9: MOFCOM and GAC Announcements No. 55, 56, 57, and 58, as well as MOFCOM Announcements No. 61 and 62. Together, those six instruments had constructed one of the most comprehensive export control frameworks ever applied to a single commodity category.

The October 2025 package was formidable in its scope. Announcement No. 56 imposed controls on rare earth equipment and raw materials; No. 57 added five additional elements, holmium, erbium, thulium, europium, and ytterbium, to China's restricted list; No. 62 covered technologies related to rare earth mining, smelting, separation, metal refining, magnetic material manufacturing, and recycling. Most striking of all was the so-called 0.1 percent extraterritorial rule: any product manufactured abroad containing at least 0.1 percent Chinese-origin rare earth materials by value, or produced using Chinese rare earth technologies, would require MOFCOM approval before re-export to a third country. That provision alone would have functionally extended Beijing's regulatory reach into the supply chains of allies and competitors alike, touching products assembled in Japan, Germany, South Korea, and the United States.

All of that is what got suspended. What did not get suspended was Announcement No. 18, issued on April 4, 2025, which placed seven medium and heavy rare earth elements, including terbium, dysprosium, yttrium, gadolinium, samarium, scandium, and lutetium, together with their metals, alloys, compounds, and magnet materials, under a case-by-case export licensing regime. That regime has remained fully in force throughout the truce period, and its operational impact has been substantial. The statutory review target of 45 working days routinely stretches to 60 or 120 days in practice for heavy rare earths. The application itself requires exporters to disclose their full manufacturing value chain, the final application of the material, and authenticated customer identity. As one legal analysis described it, the system generates costs on the applications it approves, not only on those it rejects.

This is the uncomfortable reality that sits underneath the diplomatic language of the truce: for the seven elements covered by April 2025 controls, including the heavy rare earths most critical to defense and clean energy applications, the truce never provided relief. What November 10 marks is not the end of Chinese leverage over rare earth supply chains but the potential restoration of a second, far more expansive layer of control on top of one that has never left.

Testing the Limits: Blacklists, Rheinmetall, and the Pattern of Selective Pressure

In my August piece on Beijing's decision to name MP Materials and USA Rare Earth directly on its export control blacklist, I noted that the move marked a qualitative shift from broad commodity restrictions to company-specific denial. What has become clearer since is that the June 22 action was not an isolated escalation but part of a rolling pattern of selective pressure that Beijing has applied consistently throughout the truce period.

On June 22, MOFCOM prohibited exports of dual-use items to 10 U.S. entities with immediate effect. The list included MP Materials, the operator of Mountain Pass in California and the most prominent symbol of American rare earth ambition, and USA Rare Earth, which has received substantial federal support as part of Washington's domestic supply chain push. Beijing positioned the move as a response to U.S. additions to the Pentagon's 1260H list of Chinese military-linked companies. Whatever the stated justification, the strategic signal was unmistakable: the companies whose entire purpose is to reduce American dependence on Chinese rare earths had been placed squarely in the crosshairs of Chinese export control law.

Five weeks later, on July 24, MOFCOM issued Announcement No. 30 of 2026, adding 14 European entities to its export control watchlist. The list included Rheinmetall AG, Germany's largest defense manufacturer, alongside Italian motor maker Lafert S.p.A., French defense electronics firm InPACT S.A., and Polish photonics company Vigo Photonics S.A. The restrictions covered not only rare earths but gallium, germanium, graphite, antimony, tungsten, and eight additional critical materials. Beijing framed the action as a response to a new round of EU sanctions against Russian-linked companies, several of which were Chinese entities. The timing, coming less than a week after Brussels announced that round of sanctions, was too precise to read as anything other than deliberate calibration.

Chris Berry, president of House Mountain Partners and one of the sharper independent voices tracking battery metals markets, framed the cumulative effect plainly: 'As long as China continues its saber-rattling regarding dual use and export restrictions, this will serve to impede trade flows and elevate prices.' What the June and July actions together demonstrate is that the truce has not functioned as Beijing's critics feared it might, as a period of restraint in which China stepped back from using export controls as geopolitical leverage. It has functioned instead as a period of selective application, in which Beijing has preserved and exercised that leverage while maintaining enough compliance with the November 2025 agreement to avoid triggering a full breakdown. The distinction matters enormously for what happens after November 10.

The Price Signal: What Markets Are Already Pricing In

The human cost of the truce's ambiguity does not show up in diplomatic communiques. It shows up in procurement budgets, factory scheduling decisions, and the price indices that purchasing managers in Germany, Japan, and the United States check with increasing anxiety each morning. Since China imposed its April 2025 licensing regime, yttrium oxide prices outside China have risen roughly 140-fold, reaching nearly $1,100 per kilogram by May 2026 from single-digit levels before the restrictions. Dysprosium oxide has climbed to approximately $1,450 per kilogram. Terbium oxide, perhaps the most strategically important heavy rare earth for high-performance permanent magnets used in electric motors and missile guidance systems, reached around $4,500 per kilogram in European markets by mid-2026.

The numbers become more striking in comparison. Inside China, dysprosium trades at roughly $200 per kilogram and terbium at around $900 per kilogram, representing approximately 20 percent of the prices quoted in Western markets. Neodymium and praseodymium, the workhorses of commercial magnet production, trade at around $125 per kilogram within China, roughly 60 percent of quoted Western prices. The gap is not a market anomaly. It is a structural feature of a supply chain that runs through a single processing chokepoint, and it has been deliberately maintained by Beijing's licensing architecture.

Shipments of yttrium, dysprosium, and terbium remain down roughly 50 percent compared with the 12 months before April 2025, according to Chinese customs data. U.S. imports have fared worse than European ones: when China eased restrictions in November 2025, magnet exports surged 13 percent overall, with European imports jumping 60 percent year over year. U.S. imports fell 11 percent in the same month. For yttrium specifically, China exported just 17 tons to the United States in the eight months between April 2025 and December 2025, compared with 333 tons in the prior eight months. The truce has not restored pre-restriction flows. It has merely stabilized an already degraded baseline.

The Financial Times reported in August that European erbium prices had risen more than 50 percent since June, driven by stockpiling in anticipation of a November reimplementation. China's Rare Earth Price Index stood at 264.6 on August 5, 2026, near its highest sustained levels since early 2024. The market, in other words, is already pricing in uncertainty. The question is whether that uncertainty resolves into renewal, escalation, or something more ambiguous and therefore more dangerous.

The Renewal Question: Bessent, Greer, and the September Summit

When Scott Bessent sat down with Reuters on the margins of the G7 finance meeting in Paris in May, his phrasing about China's compliance being 'satisfactory, but not excellent' landed in the specialist trade press with the dull thud of a diplomatic warning shot. It was not the language of a Treasury secretary preparing to announce an easy renewal. It was the language of someone signaling that the terms of any extension remained open, contingent, and negotiable.

Bessent added that Washington was 'not in a rush' to extend the agreement, noting that 'things are stable' and that there was time to address renewal at meetings later in the year. U.S. Trade Representative Jamieson Greer, speaking on CNBC in May, offered a slightly warmer formulation: 'There's certainly a willingness on both sides, that if this continues to work out well for each country, to continue that and to extend this ability to make sure we're getting rare earths.' But Greer also acknowledged that U.S. rare earth flows from China had come up to 'better levels, sometimes it's slow,' a phrasing that maps closely onto the customs data showing persistently below-historical volumes reaching American importers.

From Beijing's side, MOFCOM stated that 'extending this arrangement is in the common interest of both countries' and that 'both sides reaffirmed their commitment to continuing to implement the outcomes of the previous trade and economic consultations.' The statement is textbook diplomatic hedging: warm enough to signal engagement, vague enough to commit to nothing. The pattern is consistent with a Chinese negotiating posture that has, throughout the truce period, kept all options formally open while exercising selective pressure in practice.

The most significant venue for resolution is the expected Xi-Trump White House summit this September, ahead of which Bessent has indicated he will meet with Vice Premier He Lifeng to work through the details. Additional opportunities exist at the APEC summit in November in China and the G20 leaders meeting in December in Florida. The calendar provides mechanisms for resolution. Whether there is political will to use them is a separate question. As Heidi Crebo-Rediker, who has tracked the truce closely, framed it: 'The US and its allies cannot out-mine, out-process or outspend China quickly enough to rebuild resilience in the near term.' An extension of the rare earth agreement, she noted, would represent 'the best-case outcome' for U.S. access to critical materials. The architecture of urgency that Washington has been constructing through initiatives like FORGE and Project Vault, which I covered in August, is real. It is also, by every honest accounting, years away from providing meaningful supply chain insulation.

The Structural Reality: Why Leverage Does Not Expire With the Truce

Whatever happens on November 10, the underlying conditions that gave Beijing its leverage in the first place will not change. The IEA's Global Critical Minerals Outlook 2026 puts China's share of global rare earth refining capacity at 91 percent. China controls roughly 94 percent of permanent magnet production. It produced an estimated 270,000 tonnes of rare earth oxides in 2024, compared with a combined 60,000 tonnes from the rest of the world. China manufactures over 300,000 tonnes of NdFeB magnets annually; the U.S. domestic target is 1,000 tonnes. The gap between those numbers is not a gap that closes in 10 weeks, or 10 months.

The IEA's analysis of what full enforcement of the October 2025 controls would mean is the starkest single data point in the policy debate: $6.5 trillion of annual downstream manufacturing outside China could be threatened, with the United States and Europe together accounting for nearly half of that exposure. That figure covers automotive, aerospace, medical devices, wireless technology, and defense industries, sectors that thread through every major economy on earth. It is why governments have raised public finance commitments for critical minerals from roughly $15 billion in 2023 to $65 billion by 2025, a fourfold increase that reflects genuine alarm without yet reflecting genuine supply chain resilience.

The domestic projects meant to bridge the gap face their own timelines. MP Materials and USA Rare Earth, both now on Beijing's export control blacklist, are not expected to reach full rare earth magnet production until 2027 or 2028 at the earliest. Refining and separation capacity outside China amounts to less than 40,000 tonnes, concentrated in Malaysia and the United States, with smaller contributions from Australia, Vietnam, Japan, the United Kingdom, France, and Estonia. According to the IEA, meaningful diversification would require a fourfold increase in refining capacity and a sixfold expansion of magnet production outside China. The agency identifies metallization, alloy production, specialized equipment, and skilled labor as the critical weaknesses in emerging supply chains, none of which can be resolved through diplomatic language alone.

A Japanese embassy official in Washington, speaking to S&P Global Platts, was unusually direct about the depth of the problem: 'China holds almost 100 percent competitive edge in medium and heavy rare earth refining due to cost factors.' New projects in the U.S. and expanded output in Malaysia have reduced China's leading supplier share from over 90 percent in 2023 to approximately 85 percent in 2025. Analysts project it could fall to 70 percent by 2035 if planned developments arrive on schedule. That is progress. It is also a 2035 projection being evaluated against a November 2026 deadline.

Conclusion: The Countdown and What Comes Next

There is a phrase from Bessent's Paris interview that has stayed with me since I first reported on the truce's trajectory in August: 'Things are stable.' It is the kind of statement that is true in the way that a suspension bridge is stable, structurally sound under present conditions, but sensitive to the precise combination of load and stress that nobody in Washington or Beijing can fully predict in advance. The bridge has held for 10 months. Whether it holds for 10 more weeks, and what it looks like on the other side, remains genuinely unresolved.

The Information Technology Industry Council captured the operational stakes in May: 'The uncertainty that this looming deadline creates for companies has real implications for strategic planning and investment globally, including as companies consider making investments in the United States.' That sentence describes, in bureaucratic language, what purchasing managers in Hamburg, Nagoya, and Detroit are living in practical terms every day: the inability to plan confidently past November 10, the cost of building inventory buffers against an event that may or may not materialize, and the compounding effect of that uncertainty on investment decisions whose payback periods run years or decades.

What makes the current moment distinct from earlier phases of the U.S.-China minerals dispute is the combination of factors now converging simultaneously. The truce expiry, the September Xi-Trump summit, the continued operation of the April 2025 licensing regime, Beijing's June and July blacklistings, and the persistent price premiums in Western heavy rare earth markets are not separate phenomena. They are facets of a single, intensifying pressure system. As I reported in August on the clock running on the truce's expiry, the fundamental dynamic has not changed: Beijing holds the processing chokepoint, Washington is racing to build an alternative architecture, and the gap between those two realities has not narrowed fast enough to matter before November 10.

Bessent said China had been satisfactory, but not excellent. In the language of critical mineral diplomacy, with $6.5 trillion of downstream production theoretically at stake and 69 days left on the calendar, satisfactory but not excellent is another way of saying: watch this space very carefully.