The Escalating Rare Earths War: China’s Export Controls Trigger Tensions Amid Biden-Xi Meeting Fallout

In the aftermath of the recent meeting between President Joe Biden and President Xi Jinping at the Asia-Pacific Economic Cooperation event in San Francisco, hopes for improved Sino-US relations have dwindled. China’s announcement of export controls on rare-earth technologies has added fuel to the fire, further straining the already complex relationship.

There are rare earth metals outside of China. U.S. and Australia have deposits. It will simply cost more because it won’t be slave labor and will adhere to significantly more strict environmental standards- Oceans Seven

China, as the world’s leading processor of rare earths, has imposed an export ban on technologies used to extract and separate these crucial metals. A document from the Ministry of Commerce, cited by Bloomberg, reveals the extent of these measures. This move is a significant blow to Washington and its allies who have been working to reduce their dependence on China’s dominance in the global rare earths market. With control over approximately 85% of the global refining capacity for the 17 rare earth metals, China’s influence extends across various industries, from electric vehicles to wind turbines and military hardware.

The tit-for-tat actions between the US and China began earlier when Beijing initiated export bans on gallium and germanium in July. This retaliation was in response to the Biden administration’s semiconductor chip export ban, revealing the increasing tension between the two economic powerhouses.

China is banning the export of some rare-earth metals and the US may raise tariffs on Chinese electric vehicles, as the Biden administration tries to create a warmer relationship with Beijing.

Brendan Murray reports https://t.co/mp4PengXvO pic.twitter.com/p4gJdSgtw1

— Bloomberg TV (@BloombergTV) December 21, 2023

Adding another layer to the dispute, the Wall Street Journal reported that the Biden administration is contemplating tariffs on specific Chinese products, such as electric vehicles, with the aim of bolstering the US clean-energy sector. This move is seen as a response to the influx of cheap Chinese clean energy products into the market, especially during a downturn in solar, wind, and hydrogen industries.

The escalation of export restrictions by Beijing highlights a broader trend of both Eastern and Western powers weaponizing industrial raw materials and technologies against each other. For the West, a key concern is the realization of a grand vision to reshore supply chains, which, at present, remains a distant goal.

China’s control over rare earths amplifies its strategic leverage, providing it with a potent tool in geopolitical negotiations. The Biden administration, recognizing the critical role rare earths play in various high-tech industries, is likely to intensify efforts to diversify supply chains and reduce dependence on Chinese resources. This challenge is part of a larger struggle for technological dominance that extends beyond rare earths.

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