How China built up its dominance in rare earths

China this week announced unspecified sanctions on US defense contractors Boeing, Lockheed Martin, and Raytheon. The state-run tabloid Global Times, however, tried to fill in the blanks. Quoting unidentified analysts, it reported that China could restrict the US’s access to rare earths in response to Washington’s latest arms sales to Taiwan, which Beijing claims as its own territory.

If the threat of rare earths restrictions materializes, it would have echoes of 2010, when China slashed rare earth exports worldwide and entirely cut Japan off in an effort to pressure Tokyo to release a detained Chinese fishing trawler captain. The export restrictions caused a whiplash in global rare earths prices, which skyrocketed as people panicked and stockpiled inventories, only for prices to plunge when the speculative bubble popped.

The first thing to know about rare earths is that they are not actually all that rare. The group of 17 metals, however, are crucial for the manufacturing of items that power the global economy: smartphones, electric vehicles, military weapons systems, aircraft engines, wind turbines, and much more. Because of their uses in strategically important industries, rare earths have been referred to as “the new oil.” The moniker is not new: the former Chinese leader Deng Xiaoping said in 1992 that “the Middle East has oil, China has rare earths.”

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