China has by now all the proof it needs of the immense leverage it derives from its dominant position in the production and processing of rare earths, but it is well aware that the U.S. is doing what it can to reduce its own vulnerability in this area. That is a process that is going to take years, not months, and while Beijing will loosen its leash from time to time (as now), there is no chance that it will surrender its advantage without a struggle.

Why would it?

As we wrote in a recent editorial:

Rare earths matter. They are critical to the functioning of a vast range of today’s technologically advanced hardware, from smart phones to transportation (especially, but not only, electric vehicles) to medical devices. Perhaps most worryingly, they are indispensable elements in high-tech military equipment, from submarines to jets to guided missiles to satellites. Between 2019 and 2022, the U.S. imported more than 95 percent of the total rare earths it consumed, much of which was from China.

In a post in October, I noted that

the Department of Defense set itself the target of developing a complete mine-to-magnet REE [Rare Earth Elements] supply chain capable of meeting all U.S. defense needs by 2027. In the current international environment, 2027 is a very, very long way off, and even that, I suspect, will be a stretch.

And China will do what it can to stretch that stretch. To that end, it is now focusing on its rare earth supply chain. Rare earths are not particularly rare, but it is rarer to find them in enough quantities — as is the case in China — to justify processing. Beijing’s aim is to ensure that when rare earths are mined outside China, they should be sent to China for processing.

And so as Joe Leahy reports for the Financial Times:

China’s Premier Li Qiang has called for an international alliance for the development of rare earths . . . Beijing is keen to build ties with resource-rich countries to consolidate its stronghold.
Li, Beijing’s second-ranked official after President Xi Jinping [has] launched what he called the “international economic and trade co-operation initiative on green minerals.” At least 19 nations, including Cambodia, Nigeria, Myanmar and Zimbabwe, alongside the UN Industrial Development Organization, are to participate in the alliance.

Notice how Beijing, the world’s most effective greenwasher, is labeling rare earths as “green” minerals (to be fair, they are used, among many other applications, in a good number of “clean” technologies). Of course the U.N. is involved, never a good sign.

And:

Beijing backed “the distribution of benefits” of the rare earth supply chain and “better safeguarding the interests of developing countries, while also being prudent in its use for military and other purposes to prevent security risks.”

“Prudent.”

What can the Chinese mean by that?

Meanwhile, in an earlier FT story, Alice Hancock and Andy Bounds report (my emphasis added):

The EU plans to create a central body to co-ordinate the purchasing and stockpiling of critical minerals to stop the US buying up global supplies from “under our noses,” the bloc’s industry chief has said.
Stéphane Séjourné, the EU’s executive vice-president for industrial strategy, told the Financial Times that the EU had become “collateral damage” in a spat between the US and China over access to rare earth minerals, which are crucial for defense and clean technologies.

Note, again, the reference to “clean” technologies. Calculating the cost of “net zero” rarely takes account of its opportunity cost — how much better could so many of those billions wasted on dubiously effective “green” tech be spent elsewhere. One obvious example is the use of rare earths in supposedly clean, but certainly inefficient, technologies such as wind turbines. Any effect that they have on the climate will not be evident for many years. By contrast, the Chinese geopolitical threat is all too evident now. With the West subject to a rare earth squeeze, the requirements of the defense sector should be put a long way ahead of those of Big Climate, a parasitic complex that has already done far too much to enhance China’s power.