Hong Kong: China has suddenly moved to control global access to rare earth elements - REEs for short - that are vital for semiconductor and microchip production. Beijing can do so because it dominates the rare earths market. In fact, China produced 240,000 tons in 2023, equating to 68.6% of global REEs.
Such ascendancy exposes the vulnerability of the USA, which considers China its top strategic rival. Even more, China accounts for 90% of all REE processing, a figure that rises to 99% for heavy rare earth processing. According to the US Geological Survey, 40% of rare earth reserves are found in China.
Referring to Beijing’s new export controls, Dean W. Ball, a Senior Fellow at the Foundation for American Innovation, exclaimed, “This is a very big deal. China has asserted sweeping control over the entire global semiconductor supply chain, putting export license requirements on all rare earths used to manufacture advanced chips. If enforced aggressively, this policy could mean ‘lights out’ for the US artificial intelligence boom, and likely lead to a recession/economic crisis in the US in the short term.”
China’s Ministry of Commerce announced its controls via six announcements on 9 October, covering super-hard materials (i.e. synthetic diamonds); rare earth equipment and raw materials (processing machinery and chemicals); holmium, erbium, thulium, europium and ytterbium medium/heavy elements; lithium battery and graphic anode materials; foreign-made products containing Chinese rare earths; and rare earth technologies (e.g. mining, smelting, magnet and recycling technologies).
The first four controls will be implemented on November 8. The penultimate one comes into force on December 1, whilst the latter was actioned with immediate effect.
Under these regulations, China can delay, deny or restrict REE exports.
President Donald Trump responded immediately, posting on Truth Social, “They’re becoming very hostile and sending letters to countries throughout the world, that they want to impose export controls on each and every element of production having to do with rare earths, and virtually anything else they can think of, even if it’s not manufactured in China. Nobody has ever seen anything like this...”
Trump described it as “great trade hostility which came out of nowhere”. Ironically, the same could be said of Trump’s own volatile brand of foreign-trade policy. He added, “There’s no way that China should be allowed to hold the world ‘captive’, but that seems to have been their plan for quite some time, starting with the magnets and other elements that they’ve quietly amassed into somewhat of a monopoly position, a rather sinister and hostile move, to say the least.”
The US president promised to retaliate, plus he suggested an upcoming APEC meeting with Chairman Xi Jinping in South Korea was in jeopardy. “Dependent on what China says about the hostile ‘order’ that they’ve just put out, I’ll be forced, as president of the United States of America, to financially counter their move. For every element that they’ve been able to monopolize, we have two.”
And so it escalates. China vowed countermeasures if the USA imposes 100% tariffs on Chinese imports. A Ministry of Commerce spokesperson said on 12 October, “Resorting to threats of high tariffs isn’t the right way to engage with China. If the US persists in acting unilaterally, China will resolutely take corresponding measures to safeguard its legitimate rights and interests. Our position on a tariff war remains consistent - we don’t want one, but we’re not afraid of one.” (ANI)
Also Read: China dubs United States imposing 100% tariffs as ‘double standards’
Also Watch: