A new congressional investigation is peeling back the curtain on how they did it.
China is dominating the global market for critical minerals and a new congressional investigation is peeling back the curtain on how they did it.
The Chinese Communist Party carried out a decades-long strategy to control rare-earth mineral supply chains and developed an array of tactics to manipulate prices of critical minerals across the board, according to a new bipartisan report from the House Select Committee on the Chinese Communist Party.
“From cell phones to fighter jets, every American is dependent on minerals that China manipulates for its own selfish interests. As we saw last month with its rule on rare earths, China has a loaded gun that is pointed at our economy, and we must act quickly,” said John Moolenaar (R., Mich.), chairman of the China committee.
“China’s predatory practices have caused American job losses, driven American miners out of business, and jeopardized national security. This new investigation reveals China’s playbook and makes crucial recommendations for how we can secure our future for generations to come.”
The report consists of 13 findings on China’s strategies for supply chain domination and price manipulation in order to crowd out competition. It follows up with 13 recommendations for building an American critical mineral supply chain in order to compete.
The Chinese government is heavily involved in promoting its critical minerals champions. One estimate found that the CCP poured $57 billion worth of aid and subsidized credit into minerals projects worldwide.
When it comes to prices, China’s legal framework allows it to raise and lower prices depending on what the government wants. China’s government intervention extends into its market information providers, making the government’s intervention a force that impacts global markets.
Moreover, China developed a chokehold on refining and created domestic mechanisms for controlling prices. Beijing’s price manipulation tools include outright intimidation of domestic producers.
In order to dominate rare-earth mineral supply chains, China engaged in a decades-long strategy of luring in western companies, typically through partnerships and acquisitions, and then selling products below market prices to eliminate competition. Chinese producers flooded the international market with cheaper products while limiting foreign technology transfers to successfully beat out western competition. Now, China is able to use its rare-earths dominance as a geopolitical tool to fights its adversaries.
The China committee report also concludes that China conducted a whole-of-government push to lower rare-earth mineral prices in 2022 as part of its goal to keep prices low and prevent western participants from entering the market.
China pursued a similar whole-of-government strategy with lithium to keep prices down and acquire lithium assets with the goal of dominating production. Lithium-ion batteries were included in the Chinese government’s export controls announced last month, a demonstration of China’s willingness to use its lithium dominance for geopolitical ends. China suspended the export controls after a meeting in late October between President Trump and CCP ruler Xi Jinping.
The China committee’s investigation is based on a review of Chinese-language, reports, government documents, and news articles. Critical minerals identified in the report are minerals deemed essential to the U.S. economy and national security by the United States Geological Survey, an agency of the U.S. Department of the Interior.
The USGS updates its critical minerals list every three years and the Trump administration recently added ten new elements to the list. Copper and Silver are among the materials added to the updated list.
“This bipartisan investigation shows that the CCP simply does not play by the rules on critical minerals. For decades, the CCP has systematically undercut competitors and distorted the global minerals markets to achieve dominance,” said China committee ranking member Raja Krishnamoorthi (D. Ill.)
“Last month, with the announcement of its new rare earths export control regime, the CCP showed just how dangerous our dependence has become. Working with our allies around the world and environmental and labor rights stakeholders, America must usher in a new chapter when it comes to critical minerals and rare earths,” he added.
The China committee report ends with policy changes the U.S. should adopt to counter China’s critical mineral dominance. The panel proposes creating a “critical minerals czar” to coordinate financing mechanisms across the domestic supply chain. Congress must expedite federal permitting timelines to speed up projects in tandem with the financing efforts, the panel suggests.
Furthermore, the China committee recommends a critical minerals tax credit, low-cost loans from the Department of Energy, the establishment of a strategic resources reserve to prevent Chinese producers from manipulating global prices, and the development of tools for transparent pricing.
Beyond that, the committee advises the U.S. to enhance coordination with allies, support domestic magnet manufacturing, and increase the U.S.’s critical minerals workforce capacity.
The contrast in critical minerals approaches reflects the differences in economic outlooks between the U.S. and China. While the U.S. believes businesses should compete fairly in the marketplace with baseline levels of government direction, China views critical minerals as a strategic resource for the government to hold complete control over.