In October 2025, Beijing imposed sweeping controls on its rare earth exports. Since then, those controls have been suspended one short reprieve at a time, most recently until Nov. 10, within a broader trade truce running through Jan. 10, 2027. The reprieves have repeatedly come only after American concessions, demonstrating China’s leverage in the export fight. Yet China has constricted sales even during the truce, leaving buyers with few options but to take what they can get. In June, Beijing placed MP Materials and USA Rare Earth, the two companies the U.S. is counting on to build an alternative supply, on an export control list.
Washington’s effort to rebuild the supply chain has not yet reached the scale or durability the problem requires. The One Big Beautiful Bill Act includes up to $100 billion in loan authority earmarked for critical minerals, so the capital exists. What is missing is alignment of interests among the parties that would supply and benefit from it, along with a political system patient enough to sustain a course lasting a decade or more.
The authors argue that capital markets are good at financing efficient supply but poor at financing binary outcomes, such as insurance against a monopoly state seller that can manipulate both price and availability. Subsidies alone will not close that gap, and current government tools are market tools deployed in an environment of market failure.
They propose a financing instrument that could clear both economic and political hurdles: a contingent convertible security that converts into ownership if Beijing weaponizes supply.
Source: Hacker News · Summarized by HeadlinesBriefing