The CCP's Exports to the U.S. Have Experienced a Significant Decline, While the U.S. Has Produced Its First Piece of Rare Earth

Illustration: China's economy continues to decline. (Photo by China Photos/Getty Images)

[People News] Exports from the CCP to the U.S. have fallen for seven consecutive months, with tariff barriers severely disrupting the supply chain.

According to customs data from the CCP for October 2025, China's exports to the U.S. dropped sharply by 25.17% year-on-year. Although this represents an improvement from the 27% decline in September and the 33% drop in August, it still indicates a double-digit decrease in exports to the U.S. for seven straight months this year. In the first three quarters, the total value of the CCP's exports to the U.S. reached $282.95 billion, reflecting a year-on-year decrease of 15.5%.

The CCP's heavy reliance on exports to the U.S. has resulted in an unexpected overall decline of 1.1% in foreign exports during the first ten months of this year, marking the worst performance since February 2025. This is a significant slowdown compared to the 8.3% increase recorded in September and is well below the 3% growth forecasted by economists.

In October, exports saw a broad decline, with exports to ASEAN increasing by 11.0% year-on-year, a decrease of 4.6 percentage points from September; exports to the EU grew by 0.9% year-on-year, a slowdown of 13.3 percentage points from September.

The CCP's exports turned negative in October, primarily due to the gradually apparent impact of high U.S. tariffs on global trade and China's exports.

In October of last year, the CCP anticipated that Trump might take office, making tariffs unavoidable. As a result, they rushed to export to the U.S. while also redirecting exports through Vietnam and Mexico, and increasing exports to ASEAN and Europe to relieve pressure. However, neither Southeast Asia nor Europe can match the U.S. market, which sees annual exports exceeding $400 billion.

Following the meeting between Xi Jinping and Biden, the trade conflict between China and the United States has temporarily subsided; however, Chinese exports to the U.S. still face tariffs of approximately 45%. 

The decline in exports from the Chinese Communist Party (CCP) has exacerbated the current economic downturn. Due to a rush to complete exports ahead of time and a continued slowdown in global demand, the CCP's exports are under significant pressure in the fourth quarter. Economists estimate that if this trend continues, GDP growth in the fourth quarter of 2025 could decrease by 0.5-1%. Annual export growth in China may suffer a 2% loss, which could drag down GDP by about 0.3%. Unemployment in export-dependent manufacturing sectors could rise by 2-3 million people, and the CCP's economy may face the risk of deflationary pressures. 

The CCP's reliance on the U.S. market remains high. 

In the first ten months of 2025, China's exports to the U.S. accounted for about 11.4% of total exports, while exports to the EU made up around 14%, and those to the ASEAN market were approximately 17.5%. 

Since 2018, China's exports to the U.S. have dropped from nearly 19% to 11%. Nevertheless, the CCP still finds it challenging to detach from the U.S. market, which holds irreplaceable core value. The reasons for this are as follows: 

Firstly, the scale of consumption and the high purchasing power in the U.S. market are unmatched. The U.S. is the largest single consumer market globally, with a total GDP exceeding $28 trillion and a per capita GDP of over $80,000, demonstrating strong demand for high-end consumer goods, with profit margins significantly higher than those in ASEAN countries, where per capita GDP is less than $6,000.

Secondly, the U.S. market's absorption capacity is irreplaceable. The U.S. primarily imports high-value-added consumer goods and high-tech products from China, including electronics, machinery, furniture and appliances, medical equipment, semiconductors, and electric vehicle components. These products have an average value-added rate of 25-30% and a gross profit margin of 35-40%, making them difficult for emerging markets to absorb. In contrast, ASEAN mainly imports intermediate goods, re-export trade items, and low-value-added manufactured products from China, such as raw materials, components, and electronic parts, with annual re-exports to the U.S. exceeding $80 billion. However, this re-export trade is subject to secondary tariffs imposed by the U.S. The EU mainly consumes new energy products from China, such as photovoltaic panels, batteries, and wind power equipment, but it faces risks from anti-subsidy investigations and tariffs, leading to a slowdown in growth.

Thirdly, there is an impact from economic asymmetry. According to data from the General Administration of Customs of China, in the first three quarters of this year, the total import and export values between China and ASEAN, the EU, and the U.S. were $776.78 billion, $614.198 billion, and $425.8 billion, respectively, with year-on-year growth rates of 9.6%, 4.3%, and -15.6%. Meanwhile, China's trade surpluses with ASEAN, the EU, and the U.S. were approximately $198.4 billion, $209 billion, and $208.6 billion, respectively. This data indicates that the trade surplus with the U.S. has the largest relative contribution to exports.

The decline in US-China trade is expected to have a significant negative impact on the supply chain, economic structure, technological innovation, employment situation, and economic growth rate of the Chinese Communist Party (CCP). With the acceleration of 'de-China-ization' in the global supply chain, the escalation of the US-China technology war, and weakened domestic consumption alongside overcapacity, the CCP's exports to the US are likely to face setbacks, which could directly reduce GDP by 0.6-1.2%. Additionally, the shrinking trade surplus will create depreciation pressure on the Renminbi, leading to increased imported inflation and debt risks. Currently, the CCP's economy is heavily reliant on exports, and a slowdown in exports to the US signifies a substantial decrease in the overall resilience of the CCP's economy, affecting tens of millions of manufacturing jobs and heightening social stability pressures.

In November 2025, a trade and economic agreement was reached between US President Donald Trump and CCP leader Xi Jinping at the Busan summit in South Korea. Xi Jinping's demeanour showed a marked softening, moving away from the previously aggressive nationalist 'wolf warrior' diplomatic approach. He was compelled to temper ambitions for economic dominance and the behaviour of a political maverick, repeatedly expressing a desire to be friends with the US. China suspended retaliatory tariffs on US agricultural products and resumed large-scale soybean purchases, committing to 12 million tons by the end of 2025, with plans to gradually increase to 25 million tons annually by 2028. Furthermore, China pledged to combat fentanyl and suspended new rare earth export controls for one year.

The US has produced its first rare earth magnet, and Trump has intensified efforts to implement a self-sufficient rare earth strategy.

On November 7, US Treasury Secretary Scott Bessent stated in an interview with Fox that the US has successfully produced its first rare earth magnet.

Recently, Bessent announced at the newly established rare earth magnet processing centre of eVAC Magnetics in Sumter County, South Carolina, that 'this is the first (rare earth) magnet manufactured in the United States in 25 years — we are ending China's stranglehold on our supply chain.' The company took 18 months to independently produce its first magnet.

Data from the International Energy Agency indicates that in 2023, China accounted for over 60% of global rare earth mineral production, while its control over the processing stage reached 92% of global output, effectively giving it a near-monopoly in the global rare earth processing market. Additionally, the U.S. Geological Survey reported that from 2020 to 2023, 70% of the rare earth compounds and metals imported by the United States originated from China.

The Chinese Communist Party's monopoly on strategic metal resources and critical energy materials has raised concerns in the United States. In response, the Trump administration implemented a series of decisive measures:

Department of Defence equity investment: On July 10, U.S. rare earth miner MP Materials announced a significant agreement with the U.S. Department of Defence, aimed at establishing a complete rare earth magnet industry chain to reduce reliance on Chinese supplies. This agreement includes a $400 million investment from the Department of Defence to purchase preferred stock, a commitment of an additional $350 million in funding support, and a $150 million loan for expanding the separation facilities at the Mountain Pass mine in California and constructing a second rare earth magnet factory. This initiative also positioned the Department of Defence as one of MP's largest shareholders, holding a 15% stake.

MP Materials is set to establish a new rare earth magnet factory in the United States, called the '10X Facility', which will have an annual production capacity of 10,000 tons and is expected to begin operations in 2028, focusing on defence and commercial applications. The Department of Defence has established a floor price, ensuring that MP can sell two critical rare earth elements—neodymium and praseodymium oxides—at $110 per kilogram, which is significantly higher than the current market price of approximately $60 per kilogram in China. This initiative is designed to prevent China from manipulating prices and undermining competing industries through dumping practices.

In a move reminiscent of the Trump administration's 'Warp Speed' initiative, a meeting was held on July 24 at the White House, led by President's trade advisor Peter Navarro and National Security Council supply chain strategist David Copple. Attendees included major tech companies such as Apple, Microsoft, and Corning, along with ten companies involved in rare earth mining, processing, and recycling. Navarro announced that the government intends to implement a 'floor price guarantee' for rare earth products and will offer long-term purchasing commitments to domestic producers to mitigate investment risks and encourage more companies to enter the rare earth sector. He stressed that the Trump administration aims to swiftly build a comprehensive U.S. rare earth supply chain at a pace similar to that of the 'Warp Speed' initiative for vaccine development in 2020, with the target of achieving 100% self-sufficiency in defence-related rare earths by 2030.

Accelerating Internationalisation and Diversified Strategies: From October 20 to 22, the United States and Australia signed the 'Critical Minerals Framework Agreement', valued at 8.5 billion USD. This agreement includes the construction of lithium mines in Western Australia, nickel mines in Queensland, and rare earth separation plants, with over 1 billion USD in initial funding to be injected within the next six months. Concurrently, Canada announced a joint initiative with nine allied countries (including the US, Japan, and Australia) to unlock 6.4 billion CAD (approximately 4.6 billion USD) for projects, forming the G7 'Critical Minerals Production Alliance'.

On October 27, 2025, the United States and Japan reached an agreement on the 'Critical Minerals and Rare Earth Supply Chain Security Framework'. This agreement focuses on mining extraction, processing, refining, and recycling, covering 31 types of critical minerals, including rare earths, lithium, cobalt, nickel, and graphite. The goal is to jointly invest in establishing a complete alternative supply chain from upstream mining to downstream refining.

During the ASEAN Summit from October 24 to 26, the United States signed a 'Critical Minerals and Rare Earth Cooperation Memorandum of Understanding' with Malaysia and a 'Critical Minerals Supply Chain Diversification Cooperation Memorandum of Understanding' with Thailand. Malaysia ranks third globally in rare earth reserves, while Thailand boasts the largest tin processing capacity in Asia, creating the 'Southeast Asia Rare Earth Corridor'. Although the financial details of these two agreements were not disclosed separately, they are directly integrated into the broader 8.5 billion USD framework established by the US and Australia.

On October 31, Finance Minister Scott Bessenet took the lead in promoting the first batch of 26 refined/investment projects under the G7 Critical Minerals Production Alliance. Among these, 12 core refining projects—including rare earth separation, graphite purification, and lithium salt processing—were prioritised for financing, mobilising a total of 6.4 billion Canadian dollars in public and private capital. Eight of these projects are scheduled to begin production by 2026, with the aim of increasing the share of Western countries in the global critical mineral refining sector from the current less than 20% to 40% by 2030. This initiative aims to completely dismantle China's processing monopoly and has been included in the core indicators of the G7's 2025 Critical Minerals Action Plan (CMAP). 

On November 7-8, the United States signed a 3.5 billion investment agreement in critical minerals with Uzbekistan in Central Asia, which is set to unfold over three years. Following a meeting between President Trump and Uzbek President Shavkat Mirziyoyev, it was announced that this investment could expand to over 100 billion dollars in the next decade, focusing on the development of resources such as uranium, copper, gold, and rare earths. This agreement will also be included in the priority procurement list under the U.S. Defence Production Act. 

The Chinese Communist Party's economy is currently facing significant challenges, and the repercussions of 'using business to pressure politics' are becoming increasingly apparent. 

The ongoing crisis in the Chinese economy is marked by numerous challenges. The combination of the U.S. high tariff policy, the trend of 'de-China' in global supply chains, and weak domestic consumption has led to a worsening decline in China's exports. The drop in exports to the U.S. has severely impacted the resilience of the Chinese economy, presenting formidable challenges.

The Chinese Communist Party's efforts to establish military and economic hegemony, leveraging commerce to influence politics, have generated widespread global discontent, resulting in a swift decline in China's globalisation benefits. This transition from confrontational 'wolf warrior' diplomacy to economic isolation and vulnerability, along with challenges both domestically and internationally, has compelled the Xi Jinping administration to adopt a more conciliatory approach. Nevertheless, the authoritarian essence of the Communist Party remains unchanged, and the international community must stay alert and vigilant.

(First published by People News)△