China controls more than 90% of the world's rare-earth refining and processing [1], creating a strategic vulnerability for the U.S. and Taiwan.
This dominance is a critical security issue because these elements are essential for the production of semiconductors, artificial intelligence, and advanced defense technologies. Reliance on a single source for these materials allows Beijing to potentially leverage supply chain disruptions as a geopolitical tool.
Meredith Schwartz, a fellow at the Center for Strategic and International Studies (CSIS), said the implications for security are significant. The ability to refine these minerals is distinct from the ability to mine them, and China's grip on the processing stage creates a bottleneck for global high-tech industries.
This vulnerability became more apparent when China imposed export restrictions on permanent magnets and heavy rare-earths in April 2025 [2]. Such restrictions can hinder the production of precision-guided munitions and other critical military hardware.
For Taiwan, the risk is compounded by its role as a global hub for semiconductor manufacturing. Rare-earth elements are vital for the hardware that supports this ecosystem. A sudden disruption in the supply of refined materials could stall production and weaken the island's defensive capabilities.
Reducing dependence on China is now viewed as a primary goal for strengthening the security of both the U.S. and Taiwan. Efforts to diversify the supply chain involve finding alternative refining sites, and developing new mining partnerships to break the current monopoly.
“China controls more than 90% of the world's rare-earth refining and processing.”
The concentration of rare-earth processing in China transforms a commercial trade matter into a national security liability. Because these minerals are indispensable for modern weaponry and AI, the U.S. and Taiwan face a systemic risk where their technological and defensive readiness depends on the export policies of a strategic competitor.
