Hong Kong Watch launches new briefing on EU exposure to China’s rare earth dominance
This week, our Policy Director Megan Khoo visited Brussels to launch our latest policy briefing, meeting with Member of the European Parliament and Chair of the European Parliament’s Delegation for relations with the People’s Republic of China, Engin Eroglu, parliamentary staff, EEAS, and civil society representatives.
Our briefing, published today, documents how four decades of Chinese industrial policy have systematically targeted strategic chokeholds in global supply chains. The People’s Republic of China now controls roughly 60% of global rare-earth mining, over 90% of refining, and close to 90% of finished permanent magnets. For Europe, the concentration is near-total at the stage that matters most: the European Court of Auditors found that essentially all of the EU’s processed rare earths, and 97% of its magnesium, come from China.
The briefing also examines how Beijing has begun to use this leverage. Throughout 2025, in response to US tariff measures, China curtailed critical mineral exports to both the United States and the EU, using licensing to extract concessions and map adversaries’ defence-industrial networks. The outcome was a trade and technology detente culminating in President Trump’s May 2026 visit to Beijing, where the US agreed to address Chinese concerns in exchange for restored mineral flows.
The EU’s Critical Raw Materials Act sets the right targets, but the European Court of Auditors found in 2026 that diversification is not yet producing results. Closing the gap, the briefing argues, requires faster supply-side delivery, demand guarantees, and credible deterrence.
Central to our argument is that Hong Kong is not peripheral to European economic security. It is central to it. The same infrastructure that moves European chips to Russia today is what would, in a Taiwan crisis, be used to move sanctioned components into Chinese defence supply chains and help Beijing evade financial countermeasures.
On the basis of this analysis, we make the following recommendations to the European Parliament and EU institutions:
Amend the European Critical Raw Minerals Act to explicitly name China as a strategic dependency risk and require that single-country concentration assessments account for geopolitical leverage, not only supply disruption.
Formalise overarching EU coordination on China strategy, embedding the link between foreign, industrial, and environment-related policies on mineral dominance in a standing institutional architecture.
Recognise the strategic leverage of Hong Kong by making sanctions enforcement match the rhetoric and planning for a Taiwan scenario, including how to disrupt dual-use transshipment in real time and manage exposure to Hong Kong-cleared financial flows.
You can read the full briefing here.
While in Brussels, Mrs Khoo also attended a C4ADS roundtable on how open source data and analysis can be leveraged to combat the PRC’s digital surveillance and repression of ethnic minorities, including Hong Kongers, Uyghurs, Tibetans and other targeted groups.
Megan Khoo, Policy Director at Hong Kong Watch, commented:
“European policymakers are working on Hong Kong in one room and critical minerals in another. They must be in the same room. Beijing has spent four decades building leverage over the inputs Europe’s economy depends on, and Hong Kong is central to how that leverage would be used in a crisis. We are urging EU institutions to recognise that link, enforce sanctions properly, and plan now for a Taiwan scenario before the infrastructure is used against them.”
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