The core of the issue does not lie entirely in the trade deficit between China and the European Union. The more fundamental problem is that there is a huge gap between the pursuit of “strategic autonomy” by the EU leadership and reality.
Although the EU is loudly advocating for reducing its reliance on China, in fact, 90% of rare earth magnets still rely on the Chinese supply chain.
In the automotive industries of major European countries such as Germany and France, the shortage of rare earth magnets has had a severe impact on production. The Wolfsburg plant of Volkswagen in Germany has come to a standstill due to insufficient magnet supply, and European automotive enterprises are also facing the predicament of a sharp decline in inventory cycles.
What is even more subtle is that the contradiction between European enterprises and governments has gradually emerged. German Economy Minister Robert Habeck once publicly stated: “The automotive industry cannot be held hostage!” ” This sentence reveals the predicament that European enterprises are facing in rare earth supply.
Even when the French government was vigorously promoting a tough policy towards China, some German car companies had quietly obtained export licenses from China. This shows that even within the European Union, it is difficult to unify the policy towards China. The German car industry’s reliance on the Chinese market has put them in a dilemma in terms of policy choices.
In response to an order from the Chinese side
Not long ago, the Ministry of Commerce and the Ministry of Science and Technology of China issued a new round of export control measures for rare earths. This move not only indicates that China will strengthen the approval of rare earth exports, but also clarifies the control in areas such as the refining, processing and utilization technologies of rare earths.
One of the core aspects of this measure is the export restrictions on “rare earth extraction and separation technology” and “production technology of rare earth metals and alloy materials”, the masters of which are precisely Chinese researchers.
Through technological blockades, China has not only protected its industrial advantages but also blocked the path for other countries to break away from their reliance on China’s rare earths by poaching through technology.
This series of control measures has greatly restricted the development of the rare earth industry in other countries, especially the United States. Although it has accumulated some reserves of rare earth minerals, it is unable to break through China’s technological blockade due to the lack of sufficient refining technology.
The United States once attempted to lift the ban on rare earths through tariff negotiations, but failed to achieve its goal. The Trump administration proposed to reduce tariffs in exchange for China’s opening up of rare earth exports, but this was firmly rejected by the Chinese side.
Meanwhile, China’s strict control over the rare earth sector has also put tremendous pressure on enterprises in Western countries. Lockheed Martin of the United States has suffered a daily loss of up to 230 million US dollars in its F-35 production line due to its inability to obtain samarium cobalt magnets in rare earth magnets.
After the Pentagon’s assessment, the cost of re-establishing the rare earth supply chain is estimated to be as high as 300 billion US dollars and it will take at least 10 years. All these undoubtedly made Western countries feel China’s powerful influence in the rare earth field.
Despite this, China has not adopted these control measures out of a confrontational mindset. As a spokesperson for China’s Ministry of Commerce put it, these controls are aimed at preventing technology leakage, not at creating trade barriers.
China’s starting point is to hope to protect its say in rare earth technology and the industrial chain, rather than merely its advantage in resource exploitation.
In fact, rare earths are hailed as the “industrial monosodium glutamate”, and they are widely used in multiple high-tech fields such as military, electronics, and energy. With the continuous increase in global demand for rare earths, their significance has transcended that of mere mineral resources and has become an important strategic material in the technological competition among countries.
