China's control over rare earths will affect its relations with the U.S., according to Bloomberg
During their meeting in China, Chinese President Xi Jinping and U.S. President Donald Trump took a cautious stance on the issue of rare earth elements, which stands in stark contrast to previous agreements between the two countries.
This was reported by Bloomberg.
According to the publication, the issue of critical minerals was one of the key underlying factors of the summit, but both sides commented on it rather briefly. The article notes that previously, reaching an agreement to resume the supply of rare-earth magnets was one of the U.S. president’s main goals.
China’s dominance in the rare earth elements market remains a strategic advantage for Beijing. Experts estimate that this gives Xi Jinping significant leverage in relations with Washington, which could persist for many years.
These materials are critical for:
- the production of F-35 fighter jets
- Virginia-class submarines
- electric vehicles
- high-tech electronics and the defense industry
According to estimates by Bloomberg Economics, about 4% of U.S. GDP (approximately $1.2 trillion) is linked to industries that use rare earth elements.
U.S. dependence on Chinese supplies has already had practical consequences. The article mentions a case where Ford was forced to temporarily halt production due to a shortage of necessary materials.
Following last year’s events, the Trump administration stepped up efforts to reduce dependence on China. According to Bloomberg Intelligence, approximately $10 billion in government investment has been directed this year toward mines, processing plants, and production facilities in this sector worldwide.
One example of alternative production is the Lynas Rare Earths facility in Malaysia, which processes raw materials from Australia. The facility produces so-called “heavy” rare earth elements, which are of strategic importance to industry.
The process of obtaining them is complex and time-consuming and involves chemical separation. The publication emphasizes that China has been developing its own technologies in this sector for decades, giving it a significant advantage.
Analysts note that weakening China’s dominance in the rare earth elements market is a long-term process. Even under optimistic scenarios, China may remain the leading player at least until 2030.
This significantly limits the U.S.’s room for maneuver in its relations with Beijing, particularly for the Trump administration.
As Bloomberg notes, U.S. dependence on critical minerals also affects diplomatic relations. This is forcing Washington to act more cautiously ahead of new talks with Beijing, which may take place in the fall.
It is also noted that China is considering export controls on rare earth elements even beyond its own territory, which could serve as an additional tool for exerting pressure in international trade.
The situation surrounding rare earth elements remains one of the key sources of tension in U.S.-China relations. Economic dependence, the technological complexity of production, and China’s dominance shape a long-term balance of power that, according to experts, is unlikely to change significantly in the coming years.
