Xi's rare earth 'bazooka' sparks global alarm, race for supplies

China’s sweeping new restrictions on rare earth exports mark its first major effort to police the global flow of critical minerals it dominates, using the same playbook that allows the US to wield power far beyond its shores.

- 

China is responsible for 70 per cent of the world's mined rare earths and more than 90 per cent of permanent magnets made with the minerals. PHOTO: AFP

(AFP)

The rules announced last week require overseas companies to obtain Chinese government approval before exporting products containing even trace amounts of certain rare earths that originated in China.

The extraterritorial reach amounts to an assertion of control over global supply chains for materials essential for everything from fighter jets to electric vehicles.

“After decades of striving, China finally has a few real technological advantages over America,” wrote analysts at Gavekal Research in an Oct 13 note.

The barrage of steps has jolted not just the US, which has vowed to reverse them, but also other countries.

The European Union “should have a tough response”, Danish Foreign Minister Lars Lokke Rasmussen, whose country chairs the EU’s rotating presidency, said on Oct 14.

EU Economy Commissioner Valdis Dombrovskis charged China with “using trade interdependencies for political gain’, speaking in Washington as global finance chiefs gathered for fall meetings of the International Monetary Fund and World Bank.

While the degree of disruption will hinge on how broadly the new rules will be applied, the move has already energised companies and policymakers alike to look for potential countermeasures and eventual alternatives to China's critical inputs.

“We will not let these export restrictions and monitoring go on,” US Treasury Secretary Scott Bessent said in a Fox Business interview. “They have pointed a bazooka at the supply chains and the industrial base of the entire free world.”

He said he expected to get coordinated support from Europe and India, along with other democratic governments in Asia — an apparent reference to nations such as Japan and South Korea.