Cornering The Market: US Grapples With China's Control Over Essential Rare Earth Metals

The dominance of China in the rare earth metals market has raised concerns about the vulnerability of U.S. supply chains.

The metals, essential for various high-tech products, have seen China gain significant control, impacting global pricing and supply dynamics.

U.S. Trade Representative Katherine Tai recently shed light on the challenges posed by China's stronghold in the rare earths sector.

“What I want to draw your attention to is not just the vulnerabilities around China’s investments [overseas], but the fact that China’s dominant position in the world market now in [rare earths] means that it is able to turn on the faucet and turn off the faucet,” Tai said in an interview with CNBC.

While the U.S. was a significant player in the rare earths industry until the 1980s, various factors, including cost efficiencies and lenient environmental regulations overseas, reportedly led to the industry's shift away from American shores.

China, on the other hand, has received consistent governmental support, bolstering its position in the market, according to CNBC. 

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"The advantage in terms of China's dominance isn't necessarily a natural advantage. It’s not that they have more rare earths but that they were able to pursue coordinated industrial and trade policies that allowed them to corner the market,” Tai elaborated. 

China's strategic planning has not only benefited its rare earths sector but also other industries like electric vehicles, CNBC noted. Furthermore, Tai emphasized China's unique position as the primary buyer of Australia's lithium, a crucial component for electric car batteries.

Efforts by the U.S. and European officials to reduce dependency on China have been met with skepticism by Chinese Premier Li Qiang, who believes global economic interests are too intertwined for such endeavors to succeed.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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