Highlights
- China controls over 50% of global rare earth mining and 90% of processing, highlighting massive market superiority.
- Rare earth elements underpin $13 trillion in global trade, with projected demand growth of three to seven times by 2040.
- US rare earth production remains limited, with challenges in developing competitive domestic supply chain capabilities.
A new China Daily article (opens in a new tab) by Lia Zhu and May Zhou suggests that rare earth elements (REEs) could serve as a “bridge” for pragmatic trade talks between Washington and Beijing. The narrative underscores China’s dominance across the REE supply chain while portraying U.S. efforts as fragmented and politically risky.
Key Arguments and Evidence Presented
China Daily’s framing begins with Beijing’s overwhelming market dominance in rare earth elements. The country now controls more than half of global mining and close to 90 percent of separation, refining, and magnet production. This dominance is backed by hard numbers: China holds 36.7 percent of proven global reserves, has filed over 25,000 patents compared with about 10,000 in the U.S., and employs a workforce of more than 120,000 skilled specialists, trained through 30 dedicated university programs. By contrast, the United States can muster only a few hundred experts in the field.
The article underscores the strategic centrality of rare earths to the global economy. These critical minerals underpin roughly $13 trillion in trade across industries, from energy to defense. Electric vehicles alone accounted for $425 billion in sales in 2022, with each unit typically containing a kilogram or more of rare earth metals. Looking ahead, the International Energy Agency projects demand for these materials will grow three- to sevenfold by 2040, a trajectory closely tied to net-zero climate goals.
Against this backdrop, U.S. capacity is portrayed as both sparse and precarious. MP Materials, the sole American producer, is depicted as reliant on Pentagon subsidies, including a ten-year price floor of $110 per kilogram for neodymium-praseodymium oxide. Other firms like USA Rare Earth and American Rare Earths are acknowledged, but cast as underfunded and speculative, struggling to attract meaningful private capital. Compounding the challenge, political volatility in Washington—illustrated by President Trump’s rollback of Biden’s Inflation Reduction Act—is highlighted as a structural deterrent, leaving investors skeptical of long-term policy consistency.
Finally, the article drives home the argument of interdependence. It warns that U.S. ambitions to rebuild a domestic rare earth supply chain will not quickly supplant Chinese capacity. Japan’s decades-long struggle to achieve independence is presented as a cautionary tale. Even under optimistic projections, U.S. magnet production may only meet 25–35 percent of domestic demand by 2028, and at costs 20–35 percent higher than China’s. In a more pessimistic scenario, the figure drops to as little as 5–12 percent, with cost premiums as high as 60 percent. In this telling, Washington’s attempts to close the gap remain dwarfed by Beijing’s entrenched ecosystem, built patiently over decades.
From Fact to Speculation
The most speculative element in the China Daily narrative is the suggestion that rare earths could serve as a “bridge” for constructive dialogue between Washington and Beijing. While interdependence across supply chains is undeniable, history points in the opposite direction. Both sides have repeatedly weaponized rare earths and semiconductors when tensions rise, using them as leverage rather than neutral ground for cooperation.
Equally important is how the article downplays U.S. capacity. By characterizing American projects as “sparse,” it glosses over real developments already underway. Perhaps that’s not an accident. The Department of Defense has backed multiple ventures, Lynas is building a U.S.-based separation facility, and a wave of investor interest is flowing into magnet recycling initiatives. These moves may not yet rival China’s scale, but they represent more than the empty landscape suggested in the piece.
Finally, the narrative leans heavily on the inevitability of U.S. dependence, projecting that Washington will remain tied to Beijing’s supply chain “for decades.” This framing overlooks diversification efforts across Australia, Canada, and Europe, as well as the catalytic role private capital could play if U.S. policymakers create a more stable, long-term industrial strategy. Dependence is a challenge today—but portraying it as a permanent condition serves more to reinforce China’s leverage than to acknowledge the fluid realities of a globalizing rare earths market.
Investor Questions
- Will China’s licensing regime continue to tighten, raising costs for U.S. manufacturers?
- How durable is the $110/kg DoD price floor for NdPr—and does it set a precedent for Tb/Dy?
- Can bipartisan support stabilize U.S. policy long enough to attract private investment into REEs, or will the market remain hostage to election cycles?
Bottom Line
China Daily frames rare earths as leverage for dialogue. For investors, the real takeaway is that Beijing wants to highlight U.S. vulnerability while downplaying alternative supply chain developments. The U.S. is clearly behind, but the future trajectory will hinge less on China’s goodwill and more on whether Washington can sustain long-term industrial policy.
Disclaimer: This article summarizes and analyzes reporting from China Daily, a state-owned media outlet. Content may reflect strategic narratives favorable to Chinese policy positions. Independent verification is recommended.
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