By doing so, China has further deepened the 5-year-old trade war by emerging victorious in the rare earths field. We can learn from their playbook, as they have rolled out new export controls to reinforce their power over sharp global supply chains. This step has far-reaching implications — not just for the U.S., but for a number of other countries, including many in Europe. It elitely dismisses economic coercion and our dangerous dependence on Chinese means as serious concerns. As China seeks to leverage its economic power, analysts warn that the implications could be far-reaching and detrimental to global economic stability.
First, China’s recent actions indicate a clear strategy to exploit vulnerabilities in the rare earths market. These rules prohibit Beijing from imposing export restrictions on critical minerals. This new strategy is intended to harm supply chains critical to multiple industries, including the key technology and automotive industries. These countermeasures seek to take advantage of a collective fear related to a new economic bubble that is supposedly just around the corner. At the same time, China appears determined to establish its monopoly control over the raw materials essential for advanced manufacturing.
China’s monopoly on rare earth materials didn’t happen overnight. It was established over many years. China’s huge investments in mining and refining operations have made them the dominant supplier of these critical minerals. Rare earths are essential in making semiconductors, batteries, and electric vehicles. All three of these components have proved to be important catalytic elements toward the development of any new technology. Beijing’s control over these critical resources provides them serious leverage in special trading and economic partnerships on the international stage. In response, countries are rushing to protect their own supply chains.
Jamieson Greer, an analyst in international trade, focused on the far-reaching impacts of China’s expansionist policies. “China’s exercise in economic coercion affects every country in the world,” he stated. The new export controls underscore China’s strategic priorities. Consequently, it seeks to make itself into an essential actor in world markets. This unfortunate turn of events has understandably shocked U.S. officials. Even industry leaders have come to understand the grave threat of becoming unduly dependent on Chinese materials.
China’s electric vehicle (EV) market is the perfect microcosm of this growing influence. The country has made remarkable strides in producing slicker and more affordable electric cars, making them increasingly attractive to consumers domestically and abroad. Global demand for electric vehicles (EVs) has never been higher. China is prepared to capitalize on this opportunity, entrenching its position as the world’s factory and the center of the green energy transition.
Beijing’s new export controls have major ramifications — not just economically. They raise fundamental questions about national security and the goal of technological independence. Many countries find themselves at a crossroads, balancing the need for critical materials against the risks of dependency on a single nation. This dynamic creates difficult diplomatic and enforcement relationships between countries. This is particularly the case for European countries that depend on Chinese exports to support their semiconductor sectors.
Providing active and ongoing support as the world’s second-largest economic power, China’s moves have significant impacts around the world. What these new export controls show is just how interconnected today’s economy really is. They illustrate just how much the actions of one country can have knock-on impacts across the globe. Industry leaders are now tasked with reassessing their supply chains and exploring alternative sources for rare earth materials to mitigate risks associated with reliance on Chinese exports.