China is tightening the screws on the underground trade in the minerals that make modern technology possible, from advanced chips to electric vehicles. A sweeping campaign against smugglers, capped by fresh prison sentences for dozens of traffickers, signals that Beijing now treats illicit exports of rare earths and other strategic materials as a direct threat to national security as well as economic leverage.
By moving aggressively against these networks, Chinese authorities are not only enforcing their own export rules, they are also reshaping the global bargaining power around critical minerals. The crackdown lands at a moment when the United States and its allies are scrambling to diversify supply, and when the same materials are at the heart of a broader tech confrontation with President Donald Trump’s administration.
From quiet export rules to headline-grabbing prison terms
The most visible sign of the new phase came when a Chinese court sentenced dozens of people to prison and imposed heavy fines after they were caught illegally exporting key technology minerals. According to reports, the group had moved restricted materials out of the country without the required permits, in some cases disguising shipments so that the cargo cleared customs before authorities realized what had left Chinese territory. The case, highlighted in Dec court filings, shows how Beijing is now willing to use criminal law to make examples of smugglers who treat export controls as a cost of doing business.
Officials framed the prosecutions as part of a broader effort to protect minerals that Chinese planners see as essential to both economic development and military power. The same reporting, echoed in a separate account of how China believes gallium and germanium underpin its military and industrial strength, describes a system in which exporters must secure licenses before any shipment leaves port. When traders bypass that process, they are no longer just dodging taxes or paperwork, they are colliding with a strategic priority that the leadership has elevated to the level of national security.
Why gallium, germanium and rare earths matter so much
To understand why Beijing is willing to jail smugglers, it helps to look at what is in the crates. Gallium and germanium are used in high-performance semiconductors, satellite components and advanced sensors, while rare earth elements underpin everything from smartphone speakers to the permanent magnets inside wind turbines and electric vehicle motors. Chinese planners have repeatedly stressed that these materials are “especially key” to the country’s military and industrial capabilities, a view that has turned them into strategic assets rather than just commodities, as reflected in the focus on gallium supply chains.
China dominates the global supply of many of these inputs, particularly rare earths, where it controls both mining and processing capacity at a scale no other country currently matches. One detailed assessment notes that China dominates the global supply chains for rare earths that are essential in the manufacture of smartphones, wind turbines, medical devices and even components sold to United States defence firms. That dominance gives Beijing both a commercial advantage and a geopolitical lever, which is precisely why it is now trying to ensure that every tonne of strategic mineral that leaves its borders does so on its own terms.
Export controls harden in the shadow of the tech war
The crackdown on smugglers is inseparable from a broader tightening of export controls that has unfolded over the past two years. Chinese regulators have steadily expanded the list of minerals and technologies that require licenses, culminating in what analysts describe as the country’s most stringent restrictions yet on critical mineral exports. One detailed study of these measures notes that China Imposes Its Most Stringent Critical Minerals Export Restrictions Yet Amidst Escalating China Tech War, including a ban on shipments of gallium and germanium products without government approval and a requirement that a growing list of other materials be subject to greater scrutiny.
These rules sit alongside targeted measures aimed at the United States, where President Donald Trump has pushed for tighter controls on Chinese access to advanced chips and manufacturing tools. In response, Beijing has moved to restrict the export of key inputs for chipmaking and even some finished components, with one summary explaining that new rules now limit shipments of certain materials and HBM chips to the United States. In that context, a smuggler who sneaks gallium out of the country is not just breaking customs law, they are undermining a carefully calibrated pressure campaign in the wider tech confrontation.
Smuggling networks adapt as enforcement tightens
As controls have hardened, the underground trade has become more sophisticated. Chinese authorities say that some foreign entities have colluded with domestic actors to move restricted minerals through third countries, disguising the origin of shipments or mislabeling cargo to slip past inspectors. Officials quoted in one account warned that since China implemented export controls on strategic minerals, these networks have become “increasingly covert” and now rely on complex Authorities warned that since China transshipment routes that make enforcement more difficult and threaten to undermine export control goals.
Beijing’s response has been to mount a coordinated campaign that pulls in multiple ministries, customs agencies and security services. A detailed briefing on the effort describes how Beijing cracks down on smuggling of critical minerals by targeting not only direct border crossings but also third country transshipments and other indirect routes. At a high level meeting, Multiple ministries attended the session organized by the national coordination office for export control, underscoring that this is no longer a niche customs issue but a whole of government priority, as reflected in warnings that smuggling methods are becoming “increasingly covert” and require stronger export controls, a point reinforced in coverage that notes how Multiple ministries attended the meeting.
State security steps in, from Bangkok briefings to border raids
China’s state security apparatus has moved to the forefront of the campaign, treating mineral smuggling as a matter of espionage and economic sabotage rather than just contraband. In a briefing delivered in BANGKOK, officials from China’s state security agency said they were cracking down on supposed smuggling of rare earths that are used in products such as smartphones, wind turbines and electric vehicle batteries, and warned that these materials were being moved out of the country in violation of export rules. The report from BANGKOK underscores how security services now frame the issue as a threat to China’s ability to control the supply of inputs that power global clean energy and consumer electronics.
Domestic agencies have echoed that message at home, where trade and customs officials have been instructed to treat strategic minerals as sensitive goods that require close monitoring. He Yongqian, an official cited by the Ministry of Commerce, said that to resolutely prevent illegal outflows, China’s export control authorities launched a special campaign in May targeting the smuggling of strategic minerals and transshipment through third countries. In his remarks, He Yongqian emphasized that the goal was not only to catch individual smugglers but also to dismantle the networks and logistics chains that enable illicit exports, a sign that the state security lens is now shaping day to day enforcement.
Legal workarounds and the limits of control
Even as Beijing tightens enforcement, some Chinese companies are looking for ways to stay within the letter of the law while still serving overseas customers. One widely discussed example involves rare earth magnet manufacturers that have begun to devise legal workarounds to Beijing’s tightening export controls, such as shifting parts of their production offshore or exporting more processed products that fall outside the strictest licensing categories. A video report describes how Chinese Companies Find Legal Workarounds To Export magnets and related products despite new restrictions, highlighting the tension between state policy and commercial incentives.
These tactics expose a structural challenge for any government that tries to weaponize supply chains while still relying on export industries for growth. If controls are too tight, companies may lose market share or move operations abroad; if they are too loose, strategic leverage erodes and smuggling flourishes. Beijing’s decision to temporarily relax some rules illustrates this balancing act: one regulatory notice explains that China Temporarily Suspends Export Controls on Key Raw Materials, Including Rare Earths, Lithium Batteries, Diamond, with officials saying the move was formulated based on the Export Control Law while still protecting national security and interests and fulfilling international obligations. That kind of fine tuning suggests that the leadership is still searching for the right calibration between pressure and profit.
Global trade tensions and the rare earths dispute
The current crackdown also sits atop a longer history of friction over rare earths and other critical minerals. Earlier this year, China placed export restrictions on rare earth elements as part of its sweeping response to trade and technology measures from President Donald Trump, triggering a new phase in what has become known as the rare earths trade dispute. A detailed chronology notes that China introduced controls that reduced exports of rare earths and prompted complaints from trading partners who depend on these materials for high tech manufacturing.
Those tensions have only deepened as Washington has expanded its own restrictions on Chinese access to advanced chips and manufacturing tools. Beijing has responded by linking enforcement of mineral export rules to broader diplomatic demands, including calls for the United States to roll back some of its controls. At a major industry event, Visitors gave commands to a robot at Nvidia’s booth during the 3rd China International Supply Chain Expo at the China International Exhibition Center in Beijing, while Chinese officials used the occasion to pledge a crackdown on illicit exports of rare earths and urge the United States to lift more trade controls, including on products such as MI308 chips from AMD. The remarks, captured in a report that notes how Visitors interacted with cutting edge technology while officials complained about lengthy permitting processes, show how export enforcement has become a bargaining chip in a much larger negotiation.
Domestic politics, industrial policy and the message to the world
Inside China, the campaign against smugglers also serves a domestic political purpose. By publicizing arrests, sentencing smugglers to long prison terms and staging high profile meetings that bring together Multiple ministries, the leadership signals that it is serious about defending national resources and standing up to foreign pressure. The messaging is aimed at both domestic audiences, who are told that the state is protecting strategic assets, and foreign governments, which are reminded that access to Chinese minerals is contingent on respecting Beijing’s rules. The broader context is a national strategy that casts China as a technological power determined to control the inputs that underpin its rise.
At the same time, the authorities are careful to frame the crackdown as a matter of law and order rather than arbitrary coercion. Official statements emphasize that export controls are formulated based on existing legislation, that companies can still obtain licenses through established procedures, and that the goal is to prevent illegal outflows rather than to cut off legitimate trade. When China’s state security agency briefed reporters in BANGKOK about rare earth smuggling, it stressed that the minerals in question were being moved in violation of clear rules, not caught up in shifting political winds. That legalistic framing is designed to reassure trading partners even as Beijing uses enforcement to reinforce its leverage.
What comes next for global supply chains
For buyers of critical minerals, the message is that the era of easy access to Chinese supply is over. Companies that once relied on intermediaries or loosely monitored trading houses now face a world in which every shipment of gallium, germanium or rare earths can be scrutinized, delayed or denied if it does not align with Beijing’s strategic priorities. The coordinated campaign described by China and other official outlets, which targets collusion between foreign entities and domestic actors as well as increasingly covert smuggling methods, suggests that enforcement will only intensify as the tech confrontation with the United States drags on.
In response, governments and companies outside China are accelerating efforts to diversify supply, invest in alternative processing capacity and recycle more of the materials already in circulation. Yet those projects will take years to bear fruit, and in the meantime Beijing’s grip on critical minerals remains a hard fact of global trade. The latest prison sentences for smugglers are a reminder that China is prepared to use every tool at its disposal, from export bans and licensing regimes to state security investigations, to ensure that the minerals powering the digital and green revolutions move across its borders on its terms.
More from MorningOverview