Title: China’s Strategic Leverage: Rare Earths in the Context of US Rivalry
Abstract:
The recent inspection of rare earth facilities by China’s Premier Li Qiang in the southern province of Jiangxi has underscored the significance of these minerals in the country’s rivalry with the United States. As a crucial component in the manufacture of advanced technologies, including autos, smartphones, and weapons, rare earths have become a potent bargaining chip in Beijing’s negotiations with Washington. This paper examines the strategic importance of rare earths in the context of US-China relations, highlighting the contest for long-term access to these critical minerals and the potential implications for global corporate decision-making.
Introduction:
Rare earths, a group of 17 metallic elements, have become increasingly vital in the production of advanced technologies, including renewable energy systems, electronics, and defense equipment. China, which dominates the global rare earth market, has leveraged its control over these minerals to exert significant influence in its relations with the United States. The recent inspection of rare earth facilities by Premier Li Qiang, China’s second-ranking official, has underscored the strategic importance of these minerals in the country’s rivalry with the US.
The Rare Earth Conundrum:
The global rare earth market is characterized by a significant supply chain risk, with China accounting for over 90% of global production. The US, which relies heavily on Chinese imports, has been seeking to reduce its dependence on China for these critical minerals. However, efforts to develop domestic rare earth production have been hindered by environmental and regulatory concerns. The consequence is a highly asymmetric relationship, with China holding significant leverage over the US in negotiations related to rare earths.
Beijing’s Bargaining Chip:
Premier Li Qiang’s inspection of rare earth facilities in Jiangxi has been interpreted as a subtle hint at the intensifying competition with the US over strategic minerals. The visit, which took place before the Lunar New Year festivities, is seen as a telegraphing of policy direction by China’s top leadership. By emphasizing the importance of rare earths in advancing manufacturing and promoting green and low-carbon transformation, Li Qiang has underscored the critical role these minerals play in China’s economic and strategic ambitions.
Legislative Leverage:
Analysts suggest that China may introduce legislation requiring companies using even trace amounts of Chinese rare earths to report their intentions to its commerce ministry. Such a move would grant Beijing significant insight into the global supply chain, enabling it to exert greater control over the use of rare earths in critical technologies. This would not only enhance China’s bargaining position in negotiations with the US but also potentially grant it a new foothold in global corporate decision-making.
Conclusion:
The contest for long-term access to rare earths has become a critical dimension of the US-China rivalry. China’s control over these minerals has granted it significant leverage in negotiations with the US, which is struggling to reduce its dependence on Chinese imports. As the global rare earth market continues to evolve, it is likely that Beijing will seek to maintain its dominance, using legislative and regulatory measures to exert control over the supply chain. The implications of this development are far-reaching, with potential consequences for global corporate decision-making and the balance of power in the US-China relationship.
Recommendations:
To mitigate the risks associated with rare earth dependence, the US should:
Diversify its supply chain: Develop domestic rare earth production and explore alternative sources of supply, including recycling and substitution.
Invest in research and development: Enhance research into rare earth-free technologies and develop new applications for these minerals.
Engage in diplomatic efforts: Negotiate with China to establish a stable and predictable rare earth supply chain, while also exploring opportunities for cooperation in the development of critical technologies.
By taking a proactive approach to rare earth management, the US can reduce its dependence on Chinese imports and mitigate the risks associated with this critical component of the US-China rivalry.
References:
Xinhua. (2026, February 11). China’s Premier Li Qiang inspects rare earth facilities in Jiangxi.
Reuters. (2026, February 11). China’s Li inspects rare earth facilities, hints at leverage in US rivalry.
KPMG. (2026, February 6). Roundtable on Budget support for SMEs to navigate challenges, AI training for employees.