China’s Leverage from Rare Earths Dominance Over the US
China’s decades-long dominance over the rare earths supply chain — spanning extraction, refining and advanced applications — has cemented its strategic advantage, allowing Beijing to wield significant influence amid escalating trade tensions with the United States.
The 17 key elements will play a vital role in the global economy in coming years, as analysts warn that plans to secure alternative supply chains by Western governments could take years to bear fruit.
Rare earths are crucial for the defense sector -- used in fighter jets, missile guidance systems and radar technology -- while also having a range of uses in everyday products including smartphones, medical equipment and automobiles.
Visited this month by AFP, the southeastern mining region of Ganzhou -- which specializes in "heavy" rare earths including yttrium and terbium -- was a hive of activity.
Media access to the secretive industry is rarely granted in China, but despite near-constant surveillance by unidentified minders, AFP journalists saw dozens of trucks driving in and out of the rare earths mine, in addition to several bustling processing facilities.
Sprawling new headquarters are being built in Ganzhou for China Rare Earth Group, one of the country's two largest state-owned companies in the industry following years of consolidation directed by Beijing.
Heron Lim, economics lecturer at ESSEC Business School, says, “Challenges this year have "paved the way for more countries to look into expanding rare earth metal production and processing.This investment could pay longer-term dividends.
Sweeping export restrictions China imposed on the sector in early October sent shockwaves across global manufacturing sectors.
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The curbs raised alarm bells in Washington, which has been engaged in a renewed trade war with Beijing since President Donald Trump began his second term.
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At a high-stakes meeting in South Korea late last month, Trump and Chinese counterpart Xi Jinping agreed to a one-year truce in a blistering tariff war between the world's top two economies.
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The deal -- which guarantees supply of rare earths and other critical minerals, at least temporarily -- effectively neutralised the most punishing US measures and was widely seen as a victory for Beijing.