China’s rare earth exports surged in May to their highest monthly level in a year, but the increase has raised more questions than clarity as restrictions on shipments to the United States and Europe remain in effect.

Data from China’s General Administration of Customs on Monday showed the country exported 5,864.6 metric tons of rare earth materials in May, a 23 percent rise from April and the highest monthly figure since mid-2023. Cumulatively, exports in the first five months of 2025 reached 24,827 tons, only a slight increase from 24,266.5 tons over the same period last year.

Beijing’s tighter grip on its rare earth sector began in April when it imposed export license requirements on several key rare earth magnet materials and high-purity compounds. These included neodymium, praseodymium, dysprosium, and terbium — critical elements used in electric vehicles, wind turbines, and military technology. The restrictions also applied to high-performance NdFeB magnets and samarium-cobalt magnets essential for aerospace and defense.

At the time of the announcement, China’s Ministry of Commerce said the new controls were necessary “to safeguard national security and fulfill international obligations.” It added that the measures were being introduced under the country’s Export Control Law and Counter-Espionage Law, which were amended to include strategic resources such as rare earths.

The restrictions triggered immediate disruptions in supply chains across Europe and North America. By late May, several European auto component factories’ operations have been significantly impacted due to shortages of rare earth magnets. Semiconductor firms also warned they were just weeks away from shutting down production lines.

Despite the tight export controls, China granted limited exemptions in late May following diplomatic outreach from Washington and Brussels. According to a source familiar with the matter, “Two U.S. automotive suppliers were granted small-volume permits for mid-grade NdFeB magnets, enough to cover some production through the third quarter.” A European official confirmed that “a German aerospace subcontractor received a one-time export license for samarium-cobalt rotors to keep a military contract on schedule.”

These approvals, however, remain exceptional rather than systemic.

The spike in May’s export volume has puzzled industry observers, particularly since, as of that month, direct exports of many rare earth products to the U.S. and EU were still blocked.

Against this backdrop, many are asking: Where exactly did those materials go? There’s no evidence that China has resumed large-scale exports to the West, buoying curiosity about a volume jump that doesn’t align with current licensing policies.

Shipping data reviewed by multiple trade intelligence platforms suggests that much of the May increase was routed through third-party markets. Indonesia, Malaysia, and the United Arab Emirates saw marked increases in rare earth imports from China. These countries are known to serve as assembly or re-export hubs for rare earth-based components.

Rare earths have become a central fault line in U.S.-China trade tensions. Although these minerals were not targeted during the earlier rounds of trade tariffs, they have since emerged as critical leverage for Beijing. In a rare phone call between President Donald Trump and Chinese President Xi Jinping last week, the matter of rare earth access reportedly figured heavily, according to White House officials.

The United States and its allies have been scrambling to develop alternatives. In California, MP Materials is expanding rare earth refining capacity with support from the U.S. Department of Defense, while in Germany, a proposed magnet manufacturing plant is being fast-tracked using feedstock sourced from Australia. Japan has also doubled subsidies for rare earth recycling programs in a bid to ease dependence on Chinese supply.

However, as of now, China remains the dominant player — responsible for about 70 percent of global mining output and more than 85 percent of processing capacity.

With the next customs breakdown due later this month, traders and policymakers are watching closely to see whether the May surge was an anomaly, a tactical concession, or a sign of a more complex export strategy designed to maintain dominance while appearing compliant.

Africa is moving to take control of its narrative in global finance, as a new continental credit rating agency is set to begin operations by September 2025.

Known as the African Credit Rating Agency (AfCRA), the initiative aims to challenge what African leaders and economists see as systemic bias by the world’s top rating firms—Moody’s, S&P, and Fitch.

The African Union-backed agency is being developed under the African Peer Review Mechanism (APRM) and will issue its first sovereign credit rating between late 2025 and early 2026, according to Misheck Mutize, lead expert on credit rating agencies at the APRM. Currently, AfCRA is finalizing the selection of its first CEO, with an appointment expected before the end of the third quarter of 2025.

A Response to Decades of Criticism

The launch of AfCRA marks a significant policy and economic milestone, built on long-standing frustration with how global rating firms evaluate Africa’s economies. Countries such as Ghana, Zambia, and Nigeria have frequently criticized these firms for downgrades they say are based on flawed assumptions, externalized perceptions, and inadequate understanding of the continent’s unique risks and opportunities.

In the case of Zambia, which defaulted on its Eurobond payments in 2020, officials partly blamed international rating downgrades for triggering a self-fulfilling debt spiral that scared off investors and hiked borrowing costs. Similarly, Ghana, which defaulted in 2022, has argued that pessimistic ratings fuel speculation and restrict access to credit long before countries face actual fiscal collapse.

In a more recent example, the African Peer Review Mechanism directly challenged Fitch Ratings for its downgrade of the African Export-Import Bank (Afreximbank). The APRM accused Fitch of poor analysis and a “misunderstanding of African institutions.” Fitch responded by defending its methodology as globally consistent and transparent.

Safeguarding Independence

Unlike the major international rating agencies—often accused of being shaped by geopolitical interests—AfCRA will not be state-owned, Mutize said.

“This was designed to maintain independence and avoid conflict of interest. Shareholding will mainly be African private-sector driven entities,” he explained.

AfCRA’s governance structure is intended to shield the agency from political interference while also making its operations more transparent and locally informed. Crucially, it aims to be objective and credible, with Mutize emphasizing that AfCRA is not being designed to provide inflated scores.

“It is important to debunk the assumption that AfCRA is being established to give favorable ratings to Africa. No. We will issue downgrades where necessary,” he said.

Focusing on Local Currency Ratings

A key feature of AfCRA will be its focus on local-currency debt ratings, a shift that could have significant implications for Africa’s financial sovereignty. AfCRA hopes to bolster domestic capital markets and reduce overreliance on costly foreign-currency borrowing, which exposes economies to exchange-rate shocks and repayment risks, by prioritizing local-currency evaluations.

This approach aligns with the growing call among African financial institutions to de-dollarize debt and tap into local savings, pension funds, and regional capital pools for long-term infrastructure and development financing.

UN and ECA Back Africa’s Push

The agency is also being launched with strong support from global institutions like the United Nations Economic Commission for Africa (ECA). Claver Gatete, ECA’s Executive Secretary, recently criticized the current credit rating landscape, saying that African nations are being saddled with disproportionately high borrowing costs due to being consistently rated “junk” by the dominant agencies.

Gatete pointed out the disparity in real terms: while Germany can borrow $1 billion at a 2.29% interest rate—translating to about $229 million in interest over a decade—Zambia, under current credit conditions, would pay as much as $2.25 billion in interest for the same amount, nearly ten times more.

He warned that credit ratings continue to be shaped by external biases and often fail to incorporate a nuanced understanding of African political economies.

According to Gatete, most major rating agencies are headquartered outside Africa and often assess the continent through an external lens.

Many believe that these “outside-in” assessments ignore internal structural reforms, fail to recognize regional resilience, and ultimately make it more expensive for African countries to access the capital they need to grow.

A First of Its Kind

While the idea of an Africa-led credit rating agency has circulated for years, AfCRA is the first such effort poised to become operational, with institutional backing, private sector involvement, and a clearly stated regulatory agenda. What sets it apart is not just its continental scope, but the fact that it will actively rate sovereign risk with a mandate rooted in fairness, transparency, and context.

Although various African governments and financial institutions have voiced concerns about rating bias in the past, this marks the first time a coordinated response of this scale is materializing—one that may also indirectly shape the standards and expectations of international agencies operating on the continent.