The picture shows the Ministry of Commerce of China
What signal did China send when it suddenly approved the export of rare earths? Who can buy it, and who has gotten stuck? On June 7, the official website of the Ministry of Commerce of China announced that China has approved a certain number of rare earth products export applications in accordance with the law and will continue to carry out approval work. Although it was a weekend, the news immediately attracted the attention of overseas media. The reason is very simple. Many companies in Japan, the United States, Europe and India are waiting for China's rare earth products. According to media statistics, since the end of last year, China has successively launched three rounds of rare earth export control, which directly affects the new energy vehicle, semiconductor and even military industries in many countries. This policy "loosening" is actually a precise attack from China. It must be emphasized that the "controllable release" of rare earths is actually more in line with China's economic and strategic interests than a one-size-fits-all cut-off.
The picture shows rare earth minerals
I personally believe that China has two goals to achieve now: not only to make its opponents feel pain and urge them to change their trade protectionism behavior, but also to maintain our bargaining chips and ensure China's dominance in the rare earth market. There is a certain contradiction between these two goals. How to achieve balance tests China's wisdom.
Recalling the background of the introduction of rare earth export control measures, it is not difficult to see who was stuck. On April 2 this year, Trump announced the so-called "Liberation Day" tariffs, pushing the Sino-US trade war to a new height. Just two days later, China announced export controls on seven categories of medium and heavy rare earths. These resources are widely used in the military industry. The US Department of Defense's assessment report pointed out that if China completely cuts off rare earth exports, the US military production line will be paralyzed within six months.
It can be said that rare earths are a trump card in China's trade struggle with the United States. Of course, it is impossible for the United States to correct mistakes when it is known. On the contrary, the US political leaders want to join forces with Japan, the European Union and India to put pressure on China, accusing China of disrupting the supply chain. Recently, the news that Japan's Suzuki small car was discontinued has been hyped by Western media. Against this background, China's appropriate relaxation of exports to some countries and specific civilian industries can better divide and treat them and alleviate external pressure.
The picture shows rare earth mining
More importantly, the "controllable release" approach can better help China maintain its market dominance. If the overseas market is blocked with a "one-size-fits-all" approach, it will not only be unfavorable to the development of China's rare earth industry, but it will instead force its opponents to make up for the shortcomings in the supply chain. This is like the US chip ban that will eventually stimulate China's technological innovation.
We can also look at a set of data. China's rare earth reserves account for 33.8% of the world. Although it is the largest reserve country, it is not an absolute monopoly. However, judging from the global production of refined rare earths, China accounts for as high as 90%. This actually shows that China's influence comes from a complete and efficient production and processing system. There are also data that two-thirds of the rare earths mined in the United States are to be shipped to China for processing and then exported to the United States. China also has 439 patents in the mining and processing of rare earths.
The picture shows the US Department of Defense
In recent years, the United States has also been integrating its allies' power to build rare earth processing and production capacity. The US Department of Defense took the lead in raising $258 million to build a rare earth factory in Texas, but construction has not started due to problems such as wastewater licenses. Many downstream Western companies are still inseparable from China, a rare earth exporter, from the perspective of cost and efficiency.
What we need to do now is to ensure that our opponents are in a state of "starving and not starving, and being quit and not being able to quit" for a long time through "controllable release", which is most in our interests. On this basis, China must start from two aspects to ensure its long-term advantages. First, vigorously crack down on the smuggling of rare earth-related items and strictly manage national strategic materials. The second is to strengthen resource recycling, such as waste motors, etc., to avoid excessive development and loss of national strategic resources by developing a circular economy.
