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With 90% of global control over rare earth refining, China is restricting exports of essential metals such as gallium and germanium, threatening semiconductor production and strengthening its position in the trade war with the US.
China is showing the world by using rare earths as a real weapon in the trade dispute with the United States. But what are these rare earths, and why do they matter so much? Let's understand.
What are rare earths and why are they important?
Rare earths are a group of 17 chemical elements used in virtually everything involves high technology. From smartphones to wind turbines and, of course, semiconductors – those chips that make devices work. Despite the name, they are not that rare, but the extraction and refining process is expensive and complicated, which makes their market highly concentrated.
China controls 60% of the extraction and a staggering 90% of the global refining of rare earths. This is no accident. Since the 1980s, the country has invested heavily in the sector, while other nations viewed the activity as something “dirty” and expensive. Thus, China gained a monopoly and, with it, the power to dictate the rules of the game.
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China's Strategy: How Rare Earths Became a Trade Weapon
When the United States imposed restrictions on China’s access to semiconductors, the response was swift: China cut off exports of rare earths such as gallium, germanium and antimony. These metals are essential for chip production, making the move a direct blow to the Western technology sector.
The ban has put the world on alert. Without access to these materials, the production of advanced technologies is compromised. It is like taking the fuel out of a car in the middle of a race. By restricting supply, China has shown how control of the supply chain can be a strategic weapon in times of trade war.
Partnerships with Taiwan, Japan and other countries
The United States has not stood still. Along with Taiwan, Japan, South Korea and the Netherlands, the country is seeking to strengthen its semiconductor production. However, even with the technology in hand, it still needs rare earths to manufacture chips – and therein lies the problem.
Under the Trump administration, there were efforts to revive mines and refineries in the United States. Under Biden, the focus has continued, but the challenges are enormous. In addition to high costs, environmental concerns still hold back the growth of local industry.
Sustainable production outside China
Producing rare earths outside of China is like trying to swim against the tide. Environmental regulations are strict, costs are high, and technologies still need to advance to make the process viable. Even so, countries like Australia and the United States are betting on this recovery.
In addition to environmental issues, there is the time barrier. Building new refineries and mines is not something that can be done overnight. In the meantime, China remains the undisputed leader, using its position to negotiate to its advantage.
The future of trade war and the role of rare earths
If the United States and its allies can diversify their sources of rare earths, the balance of power could shift. However, if China’s dependence continues, the Asian country will have a valuable card to use in future negotiations.
The solution may lie in innovation. Developing substitutes for rare earths or recycling materials that are already in use are promising avenues. International collaboration will be essential to reduce China’s influence in the sector.
Rare earths are the oil of the 21st century. Controlling them means having power, and China understood this decades ago. For the United States and other countries, the challenge is to find ways to reduce this dependence while balancing the global trade balance. Ultimately, the lesson here is clear: to diversify is to survive.
Try to properly educate readers.
The United States restricts sales of semiconductors from around the world to China.
Semiconductors are made in part from rare earths, where 90% of the market (technology) is dominated by China.
So the US gets its semiconductors
And China gets its rare earths.
He faida, faida… I love this song