> Let China process the materials under normal circumstances, but keep 6 months of processed output on hand in case trade is disrupted (trade disagreement, pandemic, war, etc.)

That's not enough of a leeway when dealing with a country who has active land disputes with 2 countries we have a defense treaty with (Japan, Phillipines) and 1 with whom we have an ambiguous defense commitment (Taiwan).

And even the Chinese government knows that countries like the the US will try to stockpile. Almost all processing, mining, and exporting in China for REEs is managed by SoEs and under close monitoring from state regulators.

This is why the Biden admin initiated the Minerals Security Partnership with Japan, India, and Australia.