China’s rare earths are quickly becoming a powerful weapon in its growing tech tensions with the United States. According to a recent report by Jefferies, China is pushing back against US export controls on advanced semiconductor technology by tightening its grip on rare earth resources.
These rare earths are essential for many high-tech products, from smartphones to electric cars, and even military gear like missile guidance systems.
What Are Rare Earths, and Why Do They Matter?
Rare earth elements are a group of 17 metals critical for modern technology. They might sound “rare,” but they are actually quite common—just hard to mine and process. China controls about 80% of the global supply, making it the world’s biggest player in this market. Because of this, rare earths have become a strategic resource in the global tech race.
The Tech Tug-of-War
Jefferies’ report explains that the US needs China’s rare earths just as much as China needs American advanced chips. The US has put export controls on semiconductor technology to slow China’s tech advances. But China’s rare earth restrictions are a clear message: “You want our rare earths? Then ease up on your tech bans.”
China sees these US export controls as an economic attack designed to block its technological progress. This is why Beijing is not backing down. Instead, it is using its rare earth resources as leverage.
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The Bigger Picture: A Lose-Lose?
Here’s the twist: these trade restrictions don’t only hurt China. American tech companies are losing one of their biggest customers. China buys huge amounts of US technology to power its industries. Cutting off this trade damages American businesses too.
Moreover, the restrictions have pushed China to speed up its own semiconductor development. This means, in the long run, China may become less dependent on American technology — not a great outcome for US firms.
What’s China Saying?
China’s Ministry of Commerce recently denied making any special promises about rare earth exports during talks in Geneva. They defended the export controls by saying such restrictions on products with dual military and civilian uses are common practice worldwide.
What’s Next?
The Jefferies report concludes that it’s unrealistic for Washington to expect China to relax rare earth restrictions unless the US also eases its tech export controls. China wants a relationship based on mutual respect and fairness in trade. Right now, it feels that the US is not playing by those rules.
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