A power move to consolidate global hegemony that paradoxically accelerates the building of alternative supply chains, eroding China’s long-term dominance.
Beijing, August 2025
Chinese President Xi Jinping has turned rare earth elements — 17 minerals essential for the production of batteries, wind turbines, guided missiles, and electronic devices — into an explicit tool of geoeconomic pressure. Tightened export licensing, restrictions on strategic destinations, and end-use monitoring are part of a policy designed to influence China’s main industrial rivals.
In April, the impact was immediate: according to the Financial Times, manufacturers like Ford halted assembly lines in Chicago due to shortages of neodymium and dysprosium; in Japan, electric motor output fell by 12% in two months; and India reported a 15% drop in critical defense material availability. European Commission President Ursula von der Leyen publicly accused Beijing of “weaponizing strategic resources to distort the global industrial balance.”
China today refines about 90% of the world’s rare earth supply, according to the US Geological Survey, thanks to decades of accumulated technological leadership, low extraction costs, and flexible environmental regulations. However, as noted by the Peterson Institute for International Economics, this advantage is not irreplaceable: it depends on scale and efficiency rather than an unmatchable technical edge — leaving it vulnerable if buyers accelerate diversification efforts.
History offers a telling precedent: in 2010, when Beijing blocked rare earth exports to Japan during a maritime dispute, Tokyo launched a national resilience plan that reduced its dependency from 90% to 60% within a decade. Today, similar strategies are underway in the US, Australia, and the EU, with joint investments in mining and processing in California, Greenland, Canada, and Namibia. The CSIS reports that such moves have already cut China’s share of global refined supply by 7% since 2020.
Western responses go beyond mining. According to MIT Technology Review, startups in the US, South Korea, and Germany are developing large-scale rare earth recycling systems, while automakers such as BMW and Renault are redesigning motors to avoid neodymium-based magnets. The SIPRI warns that although costly, this technological transition could render the “mineral weapon” far less potent in less than two decades.
Xi Jinping’s strategy, intended to reinforce China’s global influence and pressure rival powers, thus faces a structural risk: the more the resource is used as leverage, the faster competing capabilities will emerge to neutralize it. A tool meant to impose dependency could, in the long run, become a catalyst for technological independence.
On this chessboard, the resource war is no longer fought solely in ports and customs offices but also in laboratories, industrial design studios, and remote mining contracts. And as Stratfor analysts warn, if the trend continues, Beijing could find itself by 2040 in a global market where its dominant position has been cut in half — not because it lacks minerals, but because it lacks captive buyers.
This article was produced by the Phoenix24 editorial team based on public information, verified international sources, and independent geopolitical analysis.
Esta nota fue elaborada por el equipo editorial de Phoenix24 con base en información pública, fuentes internacionales verificadas y análisis geopolítico independiente.