Rare Earth Trade Network–A Study

Highlights

• A comprehensive network analysis revealing China’s growing prominence in global rare earth trade and emerging international trade alliances
• Investigate how countries are strategically repositioning their rare earth trade relationships to mitigate dependency
• Demonstrates the critical geopolitical significance of rare earth elements in industries ranging from defense to renewable energy

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The study titled Evolution of the Rare Earth Trade Network: A Perspective of Dependency and Competition (opens in a new tab) was authored by Jilan Xu, Jiahao Li, Vincent Charles, and Xin Zhao. The research uses complex network analysis to examine the global trade dynamics of rare earth elements (REEs) from 2002 to 2018. The study hypothesizes that global trade patterns in rare earths are evolving in terms of both competition and dependency, with significant shifts in geopolitical and economic alliances. The study investigates how countries’ trade relationships are changing, particularly with China, and the resulting implications for global dependence and trade.                                               

The authors are affiliated with the Shanghai University of Finance and Economics, East China University of Science and Technology, University of Bradford, and Anhui University of Finance and Economics.

The Study Design

The study employs network theory, specifically the Point Mutual Information (PMI) and import similarity indices, to construct dependency and competition networks. The authors analyze how these relationships have developed over time, focusing particularly on China’s increasing role as a major importer and exporter of rare earths.

Findings

Key findings include China’s rise to prominence in global rare earth trade, the formation of new trade alliances—such as ASEAN nations aligning more closely with China—and a shift in U.S. dependency, notably increasing ties with European and Asian countries.

The paper also highlights the intensified competition for rare earth imports, especially involving China, the U.S., and Japan.

Relevance

These findings are relevant because they underscore the growing geopolitical significance of rare earth elements, which are crucial for industries ranging from defense to renewable energy. As competition for these resources intensifies, countries are adjusting their strategies to mitigate dependency on China, which controls a large portion of global rare earth production. The paper’s insights are crucial for understanding the strategic positioning of countries in the context of national security and global supply chains.

Limiting Elements

However, the study has limitations. It primarily relies on trade volume data and doesn’t account for the full complexity of rare earth trade, particularly in terms of production and end-use applications. Additionally, it does not fully explore the downstream value-added production, such as the manufacturing of rare earth-based magnets, where China’s dominance in processing and technology gives it significant leverage.

Future research could expand on this by considering the production aspects and externalities, such as environmental impacts and human rights issues.

Final Thoughts

 The study provides a framework for understanding the dynamics of the rare earth trade network. It calls for a strategic reassessment of global supply chains and highlights the necessity of diversifying trade relationships and production capabilities to reduce reliance on China.