Countering China's Rare Earth Dominance And Coercion

(MENAFN- Asia Times) In December, the People's Republic of China announced a retaliatory restriction of rare-earth element processing technology , a continuation of its strategy to monopolize the critical mineral market.

Comprising a substantial proportion of what the United States categorizes as“critical minerals,” these elements are used extensively in crucial end products ranging from clean energy technologies to defense systems.

The PRC has wielded this dominance to enact its own policies or punishments on dependent countries in the past, notably
in 2010 against Japan
after a Senkaku Islands territorial dispute.

While Tokyo recognized its vulnerabilities and diversified away from Chinese-supplied minerals, Washington has failed to take similar sufficient actions toward securing mineral supply in the decade since.

Nevertheless, heightened aggression from the PRC in the Indo-Pacific region and a more confrontational posture from the Trump and Biden administrations has resulted in other action in critical mineral policy. These efforts include heavy investment into stateside extraction, processing, recycling and R&D for substitutes.

Despite this
emphasis on domestic reform , mining alone will not suffice to meet America's demand. Future US independence from Chinese critical minerals supplies lies in friendshoring, or the integration of friendly, stable countries into supply chains.

The Biden administration is focusing heavily on
forming these agreements
in both a bilateral, spoke-and-wheel style and through pre-existing multinational frameworks – all with moderate success.

In addition to pledges to retain critical mineral trade and negotiations on import tariffs, some of these deals allow other nations to take advantage of the tax credits for electric vehicles provision with alternatively sourced critical minerals under the
2022 Inflation Reduction Act .

These friendshoring efforts potentially serve as a model for realistically securing tangible incentives through existing US legislation, namely the Inflation Reduction Act, to be applied to pre-existing partnerships and multinational frameworks.

There is potential to expand on these promising steps. The PRC's recent export ban offers an opportunity to hasten the establishment of resilient stockpiles and secure supply chains.

Major actions to date – friendshoring

Japan and the United States struck a landmark critical minerals agreement (CMA) in March 2023. This agreement allows Japan to gain sizable EV investments from the Inflation Recovery Act's provisions while opening windows for the US to profit from Japan's mineral processing capabilities.


Asia Times

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