Malaysian Minister of Natural Resources and Environment Sustainability Johari Ambud Ghani revealed that Chinese President Xi Jinping offered the country technical assistance to develop its rare-earth processing capabilities. Digitimes reported that the leader of the Communist Party of China proposed this deal during his visit in 2024, but it came with one key condition: the cooperation will be limited to state-owned companies only, citing technology protection concerns.
Rare-earth elements are crucial ingredients for many modern technologies, especially in semiconductor and chip manufacturing. China is one of the biggest exporters of these materials, and its control over the market has allowed it to use it as a bargaining chip in its negotiations with the U.S. So, Beijing’s offer to essentially develop a competitor for its own industry raises strategic questions, especially given Kuala Lumpur’s close ties with Washington.
The Southeast Asian nation is in a good position when it comes to rare earth raw materials, especially as it has just discovered a massive reserve within its borders. A 2025 preliminary study by the Malaysian Department of Mineral and Geoscience revealed at least 16.2 million metric tons of these elements, meaning more can be found through sampling and surveys. At the moment, the reserves are estimated to be worth around US$175 billion; tapping into them would also add another 4,000 jobs, giving the country a massive economic windfall.
However, Malaysia still lacks the expertise and technology needed to process all these minerals. So, it would make sense for the country to partner with an expert, like China. But given the geopolitical climate between the East and the West, it’s natural that Beijing would be leery of having its technology accessed by Western companies.
At the moment, the Australian mining and materials company Lynas operates two rare-earth processing facilities in Malaysia. It would import rare-earth concentrates from Australia, which are then processed into intermediate materials ready to be used in advanced manufacturing. This is what China is likely pointing at with its request to partner with state-owned companies only for the deal.
Nevertheless, it seems that China isn’t the only one putting something on the table for Malaysia to consider. Malaysian Minister of Investment, Trade, and Industry Zafrul Aziz said that the country is also holding talks regarding rare earths with the U.S., and that it’s promising “equal and non-discriminatory application of relevant policies” to the two rivals.
Malaysia is likely using its newfound resources as a way to secure better deals with the U.S. It currently has a 19% tariff when importing goods to the States; more than that, Malaysian firms must purchase around US$150 billion worth of tech from American companies — including the purchase of Boeing jets and liquefied natural gas. Bringing in Chinese expertise to process its rare-earth resources would likely alarm many U.S. officials, allowing Kuala Lumpur to use the threat of Chinese influence as a bargaining chip for current and future talks with Washington, D.C.
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