China weaponises rare earths, risks global tech stability - The Economic Times
China has introduced stricter export rules on rare earth elements, demanding global firms obtain licences if their products contain more than 0.1% Chinese-origin rare earths. The regulation particularly targets sectors like semiconductors, AI, and defence. As China already commands roughly 70% of mining output and almost 90% of refining capacity worldwide, its dominance allows it to exert considerable leverage over global tech supply chains. Taiwan, with its heavy dependence on these materials for electronics and manufacturing, is singled out as especially vulnerable. Analysts warn that such measures could spark price hikes, supply bottlenecks, and stockpiling, unless China later eases enforcement. The move is seen as a strategic escalation in using rare earths as an economic coercion tool.
The Key points
- China now requires export licences when a product’s value includes more than 0.1% Chinese rare earths.
- The new regulation impacts key areas such as semiconductors, AI, and defence industries.
- Taiwan is at risk due to its reliance on components tied to Chinese rare earths.
- China produces ~70% of the world’s rare earths and controls ~90% of refining.
- This dominance gives Beijing major influence over global high-tech supply chains.
- Analysts expect rare earth prices to surge in response.
- Nations may begin hoarding supplies to guard against disruption.
- The regulation is broader than U.S. export control measures.
- It marks a shift toward strategic use of natural resources for geopolitical leverage.
- The extent of enforcement is still uncertain, making future effects unpredictable.
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