On May 29, the Communist Party newspaper the People’s Daily warned of the United States’ “uncomfortable” dependence on Chinese rare earths. “Will rare earths become a counter weapon for China . . ? The answer is no mystery,” it wrote. And on May 20, China’s Chairman Xi Jinping visited a rare earths facility in southern China, signaling that Beijing may strategically restrict its exports of rare earths to the United States. China produces roughly 70 percent of the world’s output of rare earths, a set of elements vital for the manufacturing of products like smartphones, electric vehicles, and wind turbines. (Deng Xiaoping reportedly said that while the Middle East has oil, China has rare earths.)
This isn’t the first time Beijing has politicized the export of rare earths. In late 2010, amid a dispute with Japan over uninhabited islands in the East Sea, Beijing restricted the exports of rare earths to the country. (Chinese officials denied there was a ban.) What does this mean for U.S. industries, and how should American policymakers respond? And what lessons can be learned from the 2010 trade spat between China and Japan?