China’s Rare Earth Exports Reach Decade High Despite Tighter Controls

Economic

Commodity

Summary:

China’s rare earth exports climbed to their highest level since at least 2014 in 2025, rising 12.9% year on year, even after Beijing imposed new restrictions on several key elements....

Record Export Volumes In A Year Of Policy Tightening

China exported 62,585 metric tons of rare earths in 2025, marking the strongest annual performance in more than a decade. The increase came despite Beijing introducing new export controls in April on seven medium and heavy rare earth elements and related magnets. These materials are critical inputs across consumer electronics, automotive manufacturing, renewable energy systems, and defense equipment, making China’s export performance closely watched by global supply chains. The rise in total shipments reflects sustained external demand rather than regulatory loosening, indicating that restrictions reshaped timing and composition of exports rather than suppressing volumes outright.

The introduction of export controls in April, widely seen as a response to elevated U.S. tariffs, led to an immediate and sharp drop in shipments of rare earth magnets during April and May. This decline was directly linked to regulatory barriers rather than a collapse in demand, as buyers faced uncertainty over licensing and compliance. The relationship here is causal, with policy intervention temporarily constraining trade flows even as end-user demand remained intact.

Gradual Recovery Driven By Trade Adjustments

From June onward, exports began to recover steadily. This rebound followed a series of agreements reached between China, the United States, and Europe, which helped clarify regulatory frameworks and restore confidence among overseas buyers. The recovery suggests that once uncertainty around controls eased, pent-up demand translated back into physical shipments. This pattern highlights how geopolitical and trade negotiations can influence commodity flows indirectly by shaping expectations and procurement behavior.

In December, rare earth exports fell 20% from November to 4,392 tons, reflecting softer overseas buying after stockpiling ahead of the Christmas period. However, the December figure was still 32% higher than the same month in 2024, underscoring the strength of the underlying trend. Analysts noted that many overseas buyers had front-loaded purchases in November, when exports jumped 26.5% from October, to secure supply before the holiday slowdown. This sequencing reflects inventory management practices rather than weakening demand fundamentals.

China’s ability to deliver record rare earth export volumes despite tighter controls highlights its continued dominance in the sector. While restrictions introduced volatility at specific points in the year, they did not prevent an overall expansion in exports. This outcome suggests that global reliance on Chinese rare earth supply remains structurally intact, even as buyers and governments seek diversification. For now, policy actions have altered trade patterns at the margin but have not fundamentally reduced China’s role as the world’s primary supplier.

Source: Reuters

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Julia Daniels

Remarks of Officials

Data Interpretation

Economic

Central Bank

Poland's central bank is at a crossroads, with its recent streak of interest rate cuts likely coming to a halt. Analysts overwhelmingly expect the Monetary Policy Council (MPC) to hold its benchmark rate at 4% this week, but a surprisingly low inflation report has made the decision far from certain.

A Pause in Easing Expected

After cutting borrowing costs at its last five meetings, the central bank appears ready to shift to a wait-and-see approach. Governor Adam Glapinski has signaled a desire to evaluate the impact of the past easing, which saw rates lowered by a total of 175 basis points in six steps last year.

This view is supported by a Bloomberg survey, where 29 of 32 economists predicted that the MPC will keep rates on hold. Fellow panelist Henryk Wnorowski also suggested that the next potential cut would not occur until March at the earliest.

Low Inflation Complicates the Decision

Despite the consensus for a pause, the decision is not a foregone conclusion. The primary reason for the uncertainty is an unexpected dip in inflation, which fell below the central bank’s 2.5% target in December. This development strengthens the argument for continued monetary easing.

The division among policymakers is clear. MPC member Ireneusz Dabrowski commented last week that another rate reduction was equally as likely as holding firm. Analysts at PKO Bank Polski SA are in the minority forecasting a quarter-point cut, stating in a note, "The outcome of the MPC meeting will remain uncertain until the very end."

New Council Member Adds Unpredictability

Adding another layer of unpredictability is a change in the council's composition. This week’s meeting will be the first for Marcin Zarzecki, a new member appointed by President Karol Nawrocki. Zarzecki, whose views on monetary policy are not publicly known, replaces Cezary Kochalski, whose term concluded in December. His vote could prove decisive in what is expected to be a close call.

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Justin

Economic

Remarks of Officials

Data Interpretation

Central Bank

The December Consumer Price Index (CPI) report was as complex as analysts predicted, but the real story of inflation isn't in the headline numbers. A closer look at money supply and central bank activity reveals pressures that the official data may be missing.

Decoding the December CPI Numbers

At first glance, the December inflation data seemed to align with expectations, offering a sliver of optimism for markets hoping for future monetary easing.

The overall CPI rose 0.3% month-on-month, holding the annual inflation rate steady at 2.7%. When stripping out volatile food and energy costs, the core CPI increased by 0.2% for the month, with the annual rate unchanged at 2.6%. This slightly cooler-than-expected core reading fueled speculation that the Federal Reserve might continue easing monetary policy in 2026.

However, a persistent trend lies beneath the surface. Over the last six available readings, core CPI has posted increases of 0.2%, 0.3%, 0.3%, 0.2%, 0.2%, and 0.2%. This pattern annualizes to a rate of 2.8%, showing that core inflation has been stuck in this range for over a year.

A detailed breakdown of the December report shows specific price pressures:

• Shelter: Increased by 0.4%

• Food: Surged by 0.7%

• Energy: Rose by 0.3%, even as gasoline prices fell 0.4%

• Services: Grew by 0.3%

• Used Cars & Trucks: Posted the largest decline, falling 1.1%

A table showing the monthly percentage change in the Consumer Price Index for various categories from June to December 2025.

The Limits of Official Inflation Data

It’s crucial to approach the CPI report with caution. The data's reliability has been questioned, particularly following a November report some critics described as heavily estimated.

Furthermore, the government's methodology for calculating CPI was revised in the 1990s, leading to a formula that many argue systematically understates the true rise in the cost of living. If the formula from the 1970s were still in use, today's official CPI figures would likely be closer to 6%.

Even based on the current official data, inflation remains well above the Federal Reserve's target. As Ellen Zentner, chief economic strategist at Morgan Stanley, noted, the situation feels familiar.

"We've seen this movie before—inflation isn't reheating, but it remains above target," Zentner stated. "Today's inflation report doesn't give the Fed what it needs to cut interest rates later this month."

The True Driver: Accelerating Money Supply

The CPI measures price changes in a specific basket of goods, but it only captures a symptom of inflation. Historically, economists defined inflation as an increase in the supply of money and credit. Rising prices are the consequence of this monetary expansion.

By this fundamental measure, inflation is not only present but accelerating. The M2 money supply is currently growing at its fastest rate since July 2022. After hitting a low in October 2023, the money supply has resumed its upward trajectory, now surpassing its pandemic-era peak as money creation has quickened in recent months.

A chart from the Federal Reserve Economic Data (FRED) shows the M2 money stock in billions of dollars from 1959 to November 2025, highlighting a sharp increase beginning in 2020.

The Fed's Quiet Relaunch of QE

Further evidence of rising inflationary pressure comes from the Federal Reserve's balance sheet, which is once again expanding.

Last month, the central bank resumed purchasing U.S. Treasuries with newly created money, effectively restarting its quantitative easing (QE) program. This direct injection of liquidity into the financial system is, by definition, inflationary.

A graph illustrates the recent trend of the Federal Reserve's total assets, showing a decline through most of 2025 followed by a distinct increase in December.

The Fed's Catch-22: No Easy Way Out

This leads to a fundamental conflict for the central bank. The Fed is caught in a Catch-22: it needs to loosen monetary policy through rate cuts and QE to support a debt-laden economy, but it also needs higher rates to bring price inflation back under control. It cannot do both at the same time.

Any "cooler than expected" CPI report provides political cover to prioritize easing, despite official rhetoric aimed at managing expectations. This dynamic ensures that even if official price metrics cool temporarily, the underlying inflationary forces are likely to grow stronger.

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Gerik

Economic

Commodity

A New Milestone For Silver And Gold

Silver vaulted past the $90-per-ounce threshold, reaching as high as $91.5535, marking an unprecedented milestone for the metal. Gold followed closely, trading within $10 of its all-time high. This advance reflects a continuation of the powerful rally that began last year rather than a short-lived reaction to a single data release. December inflation data in the United States came in softer than feared, although economists noted that the figures were temporarily suppressed by distortions linked to the prolonged government shutdown. That outcome strengthened market confidence that monetary policy conditions may eventually ease further, supporting non-yielding assets such as precious metals.

Markets currently expect the Federal Reserve to pause rate cuts for several months, yet swaps pricing still points to at least two cuts later in the year. This outlook has reinforced demand for gold and silver through a direct transmission channel, as lower expected real rates tend to improve the relative attractiveness of metals. At the same time, renewed political attacks on Federal Reserve Chair Jerome Powell have revived concerns about central bank autonomy. While global central bankers and senior Wall Street executives have publicly defended Powell, the episode has increased sensitivity to institutional risk. This relationship is largely correlational rather than mechanical, with investor confidence responding to perceived governance stability rather than immediate changes in policy settings.

Geopolitical Stress And Haven Demand

Safe-haven demand has been amplified by a tense geopolitical environment. Developments such as the U.S. capture of Venezuela’s leader, renewed rhetoric over Greenland, and escalating unrest in Iran have heightened perceptions of global instability. These events have not directly disrupted precious metal supply, but they have elevated risk aversion, which historically correlates with stronger inflows into gold and silver. Citigroup responded to this backdrop by upgrading its three-month price targets to $5,000 an ounce for gold and $100 an ounce for silver, underscoring expectations that elevated uncertainty will continue to support prices.

Silver’s outperformance relative to gold has been notable. The metal gained roughly 150 percent last year, driven by a combination of a short squeeze in October, persistent physical tightness in London, and aggressive speculative positioning. Analysts also point to a broader rotation into commodities as investors seek diversification away from traditional financial assets. According to Lotus Asset Management’s Hao Hong, the rally still has room to extend, with prices potentially reaching $150 an ounce by year-end. This projection reflects momentum and positioning dynamics rather than a guaranteed price path.

Supply Constraints And Trade Policy Risks

Uncertainty surrounding U.S. trade policy has added another layer of complexity. Traders are watching the outcome of a Section 232 investigation that could result in import tariffs on silver. Fear of such measures has already altered physical flows, with large quantities of silver reportedly remaining in the United States rather than circulating globally. This has tightened availability elsewhere, reinforcing price strength. The link here is indirect, as policy uncertainty influences inventory behavior, which then affects market balance.

The latest surge highlights the scale of investment flows into precious metals. Trading volumes on Comex and the Shanghai Futures Exchange have remained elevated since late December, signaling sustained speculative and institutional participation. Platinum and palladium have also joined the rally, each gaining more than 4 percent, suggesting broad-based interest rather than isolated enthusiasm for silver alone. The Bloomberg Dollar Spot Index remained steady, removing currency volatility as a primary driver of the move.

Strategists caution that while demand for precious metals as a hedge against inflation and financial instability is likely to persist, gains in 2026 may not match the extraordinary pace seen last year. Some analysts expect gold to outperform silver over time due to its deeper liquidity and stronger association with geopolitical risk. Even so, the break above $90 has reinforced silver’s status as a high-beta expression of macro uncertainty, leaving prices highly sensitive to shifts in monetary expectations, policy credibility, and global risk sentiment.

Source: Bloomberg

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Natalie Gordon

Economic

Cryptocurrency

Data Interpretation

Central Bank

The latest data from the U.S. Bureau of Labor Statistics confirms that headline inflation remained at 2.7% for the year ending in December 2025, signaling a period of continued economic stability.

This figure, which met market expectations, provides crucial insight for both Federal Reserve policymakers and market participants, including those in the cryptocurrency space. The report also showed that core inflation, which strips out volatile food and energy prices, held firm at 2.6%.

A Deeper Look at the Inflation Data

The December 2025 report revealed no month-over-month changes from November, reinforcing the theme of price stability. The primary components driving the annual figure include:

• Energy Prices: Increased by 2.3% year-over-year.

• Food Prices: Rose by 3.1% over the same period.

The consistency in these numbers suggests that the underlying price pressures in the economy are not accelerating, providing a predictable environment for businesses and consumers.

What Stable Inflation Means for Fed Policy

With both headline and core inflation showing no unexpected volatility, the Federal Reserve is less likely to make aggressive adjustments to its monetary policy. Economists widely believe that this trend of stable inflation supports the case for holding interest rates steady in upcoming policy meetings.

Continued stability over several months could strengthen confidence in the effectiveness of current economic strategies and allow for more predictable financial planning.

Crypto Markets Remain Unfazed

The cryptocurrency sector registered no significant reaction to the inflation report. Market analysts noted that major assets like Bitcoin and Ethereum did not experience any immediate volatility following the release of the data.

This lack of response is typical when economic figures align with consensus forecasts. Since the stable inflation numbers did not introduce new uncertainty into the broader financial landscape, the crypto market continued to trade on its own specific drivers and sentiment.

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Gerik

Economic

A Record Surplus Driven By Export Momentum

China’s trade surplus expanded to almost $1.2 trillion in 2025, the largest on record, reflecting the outsized role exports continue to play in stabilizing the economy. Customs data showed total exports rose 5.5% over the year to $3.77 trillion, while imports stagnated at $2.58 trillion. This compares with a surplus of $992 billion in 2024, underscoring how the gap between outbound and inbound trade has widened rather than narrowed. The expansion of the surplus is causally linked to stronger export growth rather than a collapse in imports, pointing to external demand as the dominant force.

Momentum strengthened toward the end of the year. In December, exports increased 6.6% year on year in dollar terms, exceeding economists’ expectations and accelerating from November’s 5.9% pace. Imports also picked up, rising 5.7% year on year compared with 1.9% in November. The simultaneous rise in exports and imports suggests improving trade activity rather than a contraction-driven surplus, reinforcing the view that China remains deeply integrated into global supply chains despite geopolitical headwinds.

Shifting Trade Geography Away From The U.S.

Exports to the United States have declined sharply since President Donald Trump returned to office and intensified trade tensions. However, this weakness has been largely offset by stronger shipments to South America, Southeast Asia, Africa, and Europe. This reflects a structural reorientation of China’s trade patterns rather than a temporary diversion. The relationship here is compensatory: reduced access to the U.S. market has pushed firms to deepen penetration elsewhere, maintaining aggregate export growth even as bilateral tensions rise.

Robust export performance has helped China’s economy grow at an annual rate close to its official target of around 5%. Economists broadly expect this dynamic to persist into 2026. BNP Paribas’ chief China economist Jacqueline Rong said exports are likely to remain a major growth driver this year, highlighting how external demand continues to fill gaps left by softer domestic consumption and investment. This dependence is causal, as exports directly contribute to output and employment, particularly in manufacturing-heavy regions.

Rising Global Tensions And Policy Pushback

The scale of China’s surplus has raised concerns among trading partners worried about a surge of low-cost imports undermining domestic industries. The head of the International Monetary Fund recently urged China to address its economic imbalances and accelerate a shift away from export-led growth toward stronger domestic demand and investment. These calls reflect a correlation between China’s surplus expansion and rising protectionist sentiment abroad, which could feed back into future trade constraints.

China’s prolonged property downturn continues to weigh on consumer confidence and internal demand. The slump followed regulatory crackdowns on excessive borrowing that led to widespread developer defaults, limiting the recovery of household spending. Against this backdrop, exports remain a stabilizing force. Natixis economist Gary Ng expects export growth to slow to about 3% in 2026, down from roughly 5% in 2025, but still sufficient to keep the trade surplus above $1 trillion.

Overall, China’s record trade surplus highlights both resilience and vulnerability. While export strength has cushioned the economy against domestic weakness and external shocks, it has also intensified global scrutiny and reinforced calls for rebalancing. The sustainability of this model in 2026 will depend on whether external demand remains robust and how geopolitical frictions evolve.

Source: Bloomberg

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Ukadike Micheal

Political

Remarks of Officials

Economic

Energy

Daily News

Top Diplomats Tackle Stalled Negotiations

U.S. Secretary of State Marco Rubio and India's External Affairs Minister Subrahmanyam Jaishankar held discussions on trade Tuesday, raising questions about the future of a long-awaited bilateral deal.

According to a U.S. Department of State statement, the two officials discussed ongoing trade negotiations, energy security, and critical minerals. The conversation also touched on their "shared interest in strengthening economic cooperation" and expanding bilateral civil nuclear cooperation.

The call took place just one day after Sergio Gor, the new U.S. ambassador to India, expressed confidence that the two nations, as close partners, would resolve their differences, including the delayed trade agreement.

Trump-Era Tariffs Strain Bilateral Ties

The negotiations are happening against a backdrop of a sharp downturn in U.S.-India relations during Donald Trump's second presidency. Washington has imposed tariffs of 50% on India—among the highest in the world—partly due to its purchases of Russian oil.

Despite months of negotiations and multiple phone calls between Trump and Indian Prime Minister Narendra Modi, India remains one of the few major economies without a trade agreement with the United States.

Conflicting Signals on the Path Forward

Recent official comments have sent mixed messages about the deal's progress. Last week, U.S. Commerce Secretary Howard Lutnick claimed a trade agreement failed to materialize last year because Modi did not call Trump. India dismissed this assertion as inaccurate.

Despite the friction, India has taken steps to appease the Trump administration, such as reducing its purchases of Russian oil. Ambassador Gor noted this week that both sides "continue to actively engage" and are determined to get the trade talks across the finish line.

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