China's Ministry of State Security (MSS) has accused foreign intelligence agencies of collaborating with domestic actors to illegally export rare earth elements, in what Beijing describes as a direct threat to its national security and industrial sovereignty. The allegation, made public on July 18, follows a broader push by Chinese authorities to tighten control over critical minerals that play a key role in the global technology, defense, and renewable energy sectors.

According to the MSS, foreign operatives worked with individuals inside China to forge customs documents and reroute shipments through intermediary nations including Thailand and Mexico. These efforts, the agency claimed, aimed to circumvent China’s export controls and exploit loopholes to siphon out high-value rare earth materials.

The security agency emphasized that such operations are not isolated incidents but part of what it calls a coordinated foreign campaign to undermine China’s resource security. The MSS stated it would intensify investigations and crackdowns on these smuggling and espionage activities, sending a clear warning to both foreign actors and their local collaborators.

This announcement comes against the backdrop of increasing geopolitical competition over access to critical minerals. Earlier this year, China expanded its export controls on rare earths and rare-earth magnets in retaliation for new tariffs and restrictions imposed by the United States. The restrictions caused disruptions across international supply chains, particularly in sectors like electric vehicles, advanced robotics, and semiconductors.

Despite these tensions, rare earth exports from China rose by 32 percent in June, raising speculation that Beijing may be loosening controls in response to ongoing diplomatic negotiations with Washington. Industry analysts believe this uptick in exports could be linked to a broader attempt to stabilize relations while still retaining strategic leverage.

One such development is the reported approval for Nvidia to resume exports of its H20 AI chips to China, a move that some see as part of a trade-off related to rare earths. The U.S. tech giant had faced export restrictions earlier due to concerns about sensitive technology transfer.

The latest accusations by China's spy agency reflect a dual-track strategy: cracking down on illegal activity while also signaling a potential willingness to recalibrate policy amid ongoing trade talks. As the global race for control over rare earth resources intensifies, China's moves are being closely watched by both economic rivals and allied nations concerned about supply chain resilience.

Observers expect China to continue leveraging its dominance in rare earth production not just for economic gain but also as a diplomatic tool in negotiations involving advanced technologies and international trade regulations.