From October 1st, China will implement a new regulation that will turn all of its rare earth resources into state property. This measure, announced in response to sanctions imposed by the United States and its allies, will have a significant impact on the global technology industry, which heavily relies on these materials.
Rare earth elements, necessary for the production of semiconductors and other advanced technologies, will be strictly controlled by the Chinese State. According to Nikkei Asia, the new regulation will encompass the entire supply chain, from mining and smelting to processing, distribution, and export of these elements.
China, which accounts for around 60% of global rare earth production, not only possesses vast reserves of these minerals but has also developed advanced infrastructure for their extraction and processing. These 17 chemical elements, crucial for manufacturing magnets used in electric motors, phosphorescent materials for screens and lighting, and various alloys, are essential for modern technology.
Global Impact and Reactions
The second-largest consumer of rare earths, along with Japan and the European Union, will be severely affected by this measure. These countries use rare earths mainly in consumer electronics, electric vehicles, renewable energies, and military technology. The limitation in access to these resources could cripple industries and lead to shortages and price hikes worldwide.
China’s initial draft of the regulation was amended to include stricter control over these strategic materials, highlighting China’s intention to “punish” the United States for the imposed restrictions. While the U.S. justifies its sanctions as a measure of national protection, China argues that its regulation aims to safeguard the security of its resources and industry.
International observers believe that China will use these export controls as a bargaining tool with the United States, Europe, and Japan. The regulation states, “No organization or individual can invade or destroy rare earth resources,” with the goal of “ensuring national resource security and industrial security.”
Strategic Consequences
China’s move to block its rare earths could force industrialized nations to compete for the remaining 40% of accessible global production, exacerbating supply issues and driving up costs. This strategic move strengthens China’s position on the global stage and demonstrates its ability to influence the world economy by controlling key resources.
With this decision, China not only protects its industrial interests against international pressures but also sends a clear message about its willingness to use its natural resources as a powerful geopolitical tool.