Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
China has banned exports of technologies for processing rare earths, the latest sign President Xi Jinping’s administration is hitting back against US-led curbs on advanced computer chip sales to Chinese companies.
The new controls risk further straining geopolitical tensions between China and the US and its allies over control of global resource and technology supply chains. For many in the west, they will also underline China’s dominance over large swaths of the world’s important resources.
China controls the lion’s share of the supply chain for rare earths, key materials used in clean energy and defence products.
The commerce ministry in Beijing said on Thursday it was banning the export of technologies used in rare earth extraction and separation and in some rare earth magnets. It gave no immediate explanation for the move.
The ban comes after Chinese officials this year started requiring additional export permits for gallium, germanium and graphite, materials whose supply is largely controlled by Beijing and which are key to technology manufacturing.
Chinese officials have in recent months stressed national security as the main reason for the controls. However, many experts see them as evidence Beijing is leveraging its dominance over global clean technology supply chains to fight back at trade restrictions that have been expanded by the administration of US President Joe Biden.
Under Biden, Washington’s controls have widened from sales of cutting-edge chip technology to China to increasingly blocking Chinese battery and electric vehicle producers from accessing generous US government subsidies.
According to the International Energy Agency, China accounts for about 60 per cent of the world’s rare earth mining production, but close to 90 per cent of processing and refining.
Policymakers in Washington and Brussels have long been concerned about over-dependence on China for rare earths and many of the other materials and resources used in clean technologies.
With heavy government support, non-Chinese production of rare earth oxides jumped almost fourfold to 90,000 tonnes over the seven years to 2022, according to US data. But China has maintained its dominance, doubling its own production to 200,000 tonnes.
The IEA also forecast global demand would increase by as much as seven-fold over the two decades to 2040, underpinned by the world’s transition from carbon-intensive energy production and transport towards cleaner electricity generation and electric vehicles.
The agency noted that countries typically took more than 15 years to develop mining projects from discovery to first production, raising doubts about how fast the west might be able to disentangle itself from Chinese critical minerals supplies.
Additional reporting by Nian Liu in Beijing
Read the full article here