China's control over rare-earth refining and processing creates a strategic security vulnerability for Taiwan and the United States.
This concentration of power allows Beijing to use critical minerals as geopolitical leverage. Because these materials are essential for advanced defense technology and electronics, any disruption in the supply chain threatens the national security of democratic partners in the Pacific.
Meredith Schwartz, a fellow at the Center for Strategic and International Studies (CSIS), said diversifying these supply chains is critical for Taiwan's security. China currently dominates more than 90% of the world's rare earth refining and processing [1]. This near-monopoly gives the Chinese government significant control over the availability of materials necessary for high-tech manufacturing.
Recent actions by Beijing illustrate this risk. In April 2025, China imposed export restrictions on heavy rare earths [2]. More recently, on June 22, 2026, China blocked dual-use rare-earth exports to 10 U.S. corporations tied to the AI supply chain [3]. These moves signal a growing trend of using resource dominance to pressure foreign technology sectors.
In response, the U.S. is moving to decouple its defense industrial base from Chinese sources. The Pentagon plans to implement a ban on Chinese-origin rare earth materials by 2027 [4]. This shift requires the development of new mining and processing facilities outside of China to ensure a stable flow of materials.
Taiwan remains particularly exposed due to its reliance on these minerals for its semiconductor and electronics industries. Diversifying the supply chain is viewed as a primary method to strengthen security against potential economic coercion. The effort involves seeking alternative partnerships, and investing in domestic processing capabilities to break the current dependency on a single provider.
“China dominates more than 90% of the world's rare earth refining and processing”
The shift toward diversifying rare-earth supply chains represents a broader transition from global economic efficiency to 'security-first' procurement. By restricting exports to AI-linked firms and heavy rare earths, China is demonstrating that it views its mineral wealth as a tool for strategic competition. For Taiwan and the U.S., the 2027 Pentagon deadline creates an urgent window to build an independent infrastructure for refining, as the lack of alternatives currently makes them susceptible to sudden supply shocks.
