One Year After Busan: Has China Kept Its Rare Earth Promises?

Center for Strategic and International Studies | Gracelin Baskaran, Max Martin

Chinese rare earth exports to the United States dropped by almost 75 percent in the 11 months following the October 30, 2025 Busan Agreement between President Donald Trump and President Xi Jinping. Prior to Beijing's April 2025 export restrictions, monthly American imports averaged 76.8 metric tons, but fell to an average of 19.3 metric tons despite diplomatic commitments reached in Geneva and Busan.

Persistent licensing delays selectively choked supply chains supporting American defense, automotive, aerospace, and semiconductor manufacturing. Yttrium imports collapsed from 333 tons to 17 tons over comparable eight-month windows. Production stalled across major industrial sectors. While total Chinese shipments to non-aligned markets rose 146 percent, combined exports to the United States and Japan dropped 58 percent between November 2025 and August 2026. This targeted squeeze exposes the structural vulnerability of Allied defense industrial bases to single-source mineral controls ahead of the extended January 10, 2027 trade truce deadline.

Comment

Beijing's targeted export quotas on raw yttrium exploit a critical single-point vulnerability in military aero-engine manufacturing. Yttrium-stabilised zirconia serves as the standard thermal barrier coating protecting turbine blades against extreme combustor heat in high-performance engines like the Pratt & Whitney F135. With holding inventories shrinking across North American suppliers, minor volumetric reductions in raw mineral shipments directly impede depot-level engine overhauls and new production lines.

This manufacturing bottleneck operates through non-linear supply chain tiering, where sub-tier contractors lack dual-sourcing options for specialized chemical precursors. Processing yttrium oxide into plasma-spray powders requires high-purity refining facilities that remain overwhelmingly concentrated inside Chinese state-owned enterprises like China Northern Rare Earth Group. Until Western aerospace casting networks build domestic refining capacity for yttrium precursors, diplomatic trade truces cannot prevent localized stoppages on Pratt & Whitney and GE production lines.

Strategic Question for Discussion

If China Northern Rare Earth Group maintains strict licensing throttles on high-purity yttrium oxide, how long can Western defence contractors maintain current F135 engine production rates before depleted component stocks force depot workarounds?

The available evidence points toward severe operational constraints emerging within 12 to 18 months as buffer stocks of yttrium-stabilised zirconia run dry. Without immediate domestic or allied refining options online, prime contractors will likely be forced to ration spare parts for existing F135 overhaul cycles to sustain new airframe deliveries. This trajectory indicates that diplomatic agreements alone cannot insulate defence assembly lines from targeted material choke points.

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