According to Business Korea, the United States and the European Union are strengthening their economic security by containing China. In response, some experts say that China may counter with its rare earth elements (REEs).
As we all know, one of the most important raw materials for chip production is rare earths. Rare earths are widely distributed minerals on the earth, and due to the difficulty of smelting, separating and purifying them, and the process of handling them also produces environmental pollution and other problems, so the production countries are restricted and the scarcity value is huge.
Currently, rare earths are widely used in cutting-edge industries such as semiconductors, smartphones, electric car batteries, lasers, and fighter jets, and are therefore known as the “vitamin of modern industry”.
On the one hand, China is rich in rare earth resources. According to the USGS, China accounts for 60% of total global REE production in 2021, followed by the US (15.4%), Myanmar (9.3%) and Australia (7.9%). In that year, the U.S. is the world’s largest buyer of REEs.
China’s REE weaponization began to accelerate in May 2019, when the U.S.-China trade war reached its peak. Two years ago, it created the China Rare Earth Group by merging three state-owned enterprises and two state research institutes. The group now accounts for more than 70% of China’s rare earth production. China has repeatedly hinted at the possibility of rare earth export controls, and countermeasures from the US and EU remain inadequate. This is because these elements are extremely rare and their production can damage the environment.
In fact, the Chinese government has restricted exports to Japan during the Diaoyu Islands dispute in 2010. Despite Japan’s efforts to diversify its import supply sources, its dependence on imported rare earth elements is still 100%, with imports from China accounting for more than 60% of Japan’s rare earth elements.
On the other hand, the rare earth refining technology that China has also leads the world. Previously, the media pointed out that the “father of China’s rare earths” Xu Guangxian has raised China’s rare earth refining technology to the world’s first level, and it will take at least 8-15 years for the United States to catch up with our technology!
What is more critical is that China’s rare earth restrictions are not only resources, but also include China’s rare earth purification technology and rare earth separation technology that can reach 99.999%. This is an extremely important role for the whole world, and is a “neck” technology problem for the United States today.
In short, rare earths can be considered a strategic resource for a country. This time, China intends to use rare earth elements to counterattack, which can be said to precisely hit the “seven inches” of the United States.
Post time: Mar-24-2023