FOB China 100092, a big easing of China’s export controls on rare earth elements. This latest action represents a significant development in the nearly yearlong U.S.-China trade dispute. This decision follows closely a compromise reached in an Agreement on removal of Agricultural subsidies during U.S.-China trade negotiations conducted this week.
The rare earth mine at Bayan Obo mineral complex in Jiangxi province is one of the major producers of China’s rare earth production. A successful laborer slaves away at this section of the mine, producing his fair share of the nation’s stock of these new essential commodities. Rare earth elements are critical to high-tech sectors, like electronics, renewable energy and defense.
In April, China introduced some of the toughest export restrictions on seven categories of rare earths — a move that sent shockwaves through international markets. These controls were a product of the intensifying geopolitical rivalry between the U.S. and China. They challenged supply chains and catalyzed important conversations around our dependence on resources.
The recent decision to restart licensing for rare earth exports indicates a welcome change. It would mark a big step toward economic reengagement between the two superpowers. According to analysts, there could be long-term benefits from such action, including better cooperation with authorities and a more stable trading environment. The agreement reached during the U.S.-China trade talks this week is viewed as a significant step towards addressing longstanding tariff disputes and trade barriers.
Industry experts warn that this seemingly positive — and much-anticipated — development could have long-lasting effects for both countries. This makes access to China’s rare earth supplies very important to the U.S. It furthers America’s technological and military superiority. The positive economic impact for China from resuming exports would be enormous. This move would only reinforce its incumbency as the critical linchpin of the global supply chain.