China has defended its export controls on critical minerals after G7 leaders agreed new measures to reduce dependence on dominant suppliers of rare earths and permanent magnets, setting up a wider contest over the materials needed for defence, clean technology and advanced manufacturing.
China’s response to the latest G7 critical minerals initiative has exposed the scale of the challenge facing Europe as it seeks to reduce dependence on Beijing for materials central to defence, electric vehicles, renewable energy, electronics and industrial production.
The dispute followed a G7 declaration on securing supply chains for critical minerals, issued on 17 June, which called for coordinated measures to reduce reliance on any single supplier of rare earths and permanent magnets. The plan includes a target to bring dependence on any one non-G7 or non-partner supplier below 60 per cent by 2030, with a longer-term aim of moving towards 50 per cent as soon as possible.
Beijing rejected the implication that its export controls were coercive or destabilising. China’s foreign ministry said the measures were consistent with international practice and were intended to support peace, stability and non-proliferation. It also warned against the formation of closed economic blocs that could disrupt global trade.
The exchange is not simply another episode in the G7’s economic-security agenda. It points to a structural vulnerability in Europe’s industrial base. Rare earths and permanent magnets are used in electric motors, wind turbines, precision-guided weapons, radar systems, drones, semiconductors and other advanced technologies. A disruption in supply can therefore affect both commercial production and military readiness.
For the EU, the G7 statement overlaps with its own Critical Raw Materials Act, which sets 2030 benchmarks for domestic extraction, processing, recycling and diversification. The EU wants at least 10 per cent of its annual strategic raw materials consumption to be extracted within the bloc, 40 per cent processed domestically, and 25 per cent supplied through recycling. It also aims to ensure that no more than 65 per cent of annual consumption of any strategic raw material at any relevant stage of processing comes from a single third country.
Those targets already look difficult. China remains dominant in several parts of the critical minerals supply chain, particularly in processing and magnet production. Even where extraction takes place outside China, refining, separation and downstream manufacturing often still rely on Chinese capacity. This means that new mining projects alone will not solve the problem unless Europe and its partners also build processing, refining, magnet-making and recycling capacity.
The G7 initiative is therefore a test of implementation rather than intent. Western governments have repeatedly identified critical minerals as a strategic dependency, but diversification requires capital, permitting decisions, long project timelines, environmental approvals and guaranteed demand from industry. Mining projects can take years to develop, while processing capacity requires specialist expertise and stable commercial conditions.
For European manufacturers, the immediate issue is not only long-term access to minerals, but also licensing risk and supply predictability. China’s export controls have already created concern among companies dependent on rare earths and related materials. Delays in export approvals can affect production planning, particularly in sectors with limited substitute materials.
The defence dimension gives the issue wider political weight. Europe is increasing defence spending while also seeking to expand ammunition, drone, air-defence and electronic-warfare capacity. These sectors depend on materials that are vulnerable to supply disruption. A minerals strategy that remains confined to climate and industrial policy will therefore be incomplete. Critical raw materials are now also part of deterrence, resilience and military supply-chain planning.
The G7 declaration suggests a more coordinated approach among advanced economies, including stockpiling, supply-chain mapping and possible use of the International Energy Agency to support monitoring. But the practical test will be whether these measures lead to new production and processing capacity, rather than another layer of policy language.
There is also a diplomatic risk. Countries with mineral reserves in Africa, Latin America and Central Asia are unlikely to accept a new supply-chain model based only on exporting raw materials to Western markets. Several are seeking processing capacity, local jobs and a larger share of value creation. Europe will therefore need partnerships that offer investment and industrial development, not only access to resources.
China’s rejection of the G7 approach shows that critical minerals are now a central part of the wider economic contest between Beijing and Western capitals. For Europe, the question is whether diversification can move quickly enough to reduce exposure before the next supply shock.
The G7 has now set a numerical target. The harder task is building the mines, refineries, recycling systems and industrial contracts needed to make that target credible.
