Among the many existing tensions between the United States and China, one of the most discussed in recent weeks has been the so-called rare earths. Beijing has recently made statements accusing Washington of fueling a “scare campaign” over Chinese restrictions on the export of these materials, which are essential for advanced technologies and military systems. In other words, by definition, they are instruments of power, especially in today’s global technological struggle.
Beijing reacts and accuses the US of distorting the effects of the new measures
China’s criticism came in response to a U.S. government statement on the potential impact of new rules imposed by Beijing, which require special licenses to export products containing more than 0.1% rare earths of Chinese origin. In the statement, the U.S. asserts that these imposed restrictions have the potential to compromise high-tech supply chains, affecting various sectors within the global technology market, ranging from smartphone manufacturing to defense equipment.
The Chinese Ministry of Commerce’s counter-response, however, was defensive of its stance on these licenses, asserting that the measures are legal and aim to protect Chinese resources, which are strategic and extremely important in today’s world. According to Beijing, Washington is intentionally exaggerating the risks to justify protectionist policies and weaken Chinese imposition with a message of instability.
The US government, in turn, interprets the new policy imposed by the Asian country as a strategy aimed at pressuring industries and limiting US access to these critical inputs. Speaking of China’s significant influence on these materials, China is responsible for approximately 70% of global rare earth extraction and over 90% of processing, giving it a strong hold over this essential part of the global supply chain.
Rare earths: the invisible power behind cell phones, cars, and military fighter jets
But what are these materials, and why are they so important politically and commercially? Rare earths, despite their name, are a group of 17 abundant but complex chemical elements. These elements are used in the manufacture of electric motors, chips, screens, turbines, and even modern weapons. Neodymium, for example, is used in powerful magnets found in drones and guided missiles; lanthanum is essential for electric car batteries.
With increased Chinese restrictions, foreign companies will need to prove the origin of materials and their final destination, which, as the US government points out, could impact the supply chain, potentially delaying exports and increasing costs. In addition to the impact on technology sector logistics, the measure is a clear message from Beijing highlighting the global dependence on Chinese materials in this market.
The US responds with investments and partnerships to reduce dependence on China
As an immediate response to these sanctions, American companies in the earth materials sector began organizing to minimize their impact on American soil. Noveon Magnetics and Australia’s Lynas announced a partnership to expand domestic production in the US. The US Department of Defense also invested millions of dollars to strengthen MP Materials, one of the country’s few mining companies.
Global dependence remains, with no solution in sight
Despite its efforts, the United States is unable to produce an autonomous supply chain in the short term. Even with recent investments and partnerships, and agreements, Chinese dominance will not be limited to mining, as the country holds most of the technological know-how and industrial infrastructure that support the sector.
The global dispute over rare earth materials shows that, in the current global context of a race for technological advances, particularly in artificial intelligence and military applications, mineral resources have become instruments of commercial and political influence. By calling the American reaction a “campaign of fear,” Beijing is trying to defend its position and reminds us that global economic stability may depend on both diplomatic and commercial negotiations over these materials.