Rare earths and magnets minerals elements: Why are these giving China edge in trade war with USA?

US-China trade deal has finally been chalked out, according to President Donald Trump. Analysts have claimed that China was counting on one crucial advantage as it strived to grind out a deal to ease its high-stakes trade war with the United States -- dominance in rare earths. Now question arises how rare earths have become a key sticking point in talks between the US and China.

Rare Earths Minerals Elements

Used in electric vehicles, hard drives, wind turbines and missiles, rare earth elements are essential to the modern economy and national defence, AFP reported.

"The Middle East has oil. China has rare earths," Deng Xiaoping, the late Chinese leader whose pro-market reforms set the country on its path to becoming an economic powerhouse, said in 1992. Since then, Beijing's heavy investment in state-owned mining firms and lax environmental regulations compared to other industry players have turned China into the world's top supplier, as per AFP report.

China now accounts for 92 percent of global refined output, according to the International Energy Agency.

But the flow of rare earths from China to manufacturers around the world has slowed after Beijing in early April began requiring domestic exporters to apply for a licence -- widely seen as a response to US tariffs.

Under the new requirements -- which industry groups have said are complex and slow-moving -- seven key elements and related magnets require Beijing's approval to be shipped to foreign buyers.

Why Does USA Need Rare Earths?

Ensuring access to the vital elements became a top priority for US officials in talks with Chinese counterparts.

"The rare earth issue has clearly... overpowered the other parts of the trade negotiations because of stoppages at plants in the United States," said Paul Triolo, a technology expert at the Asia Society Policy Institute's Center for China Analysis, in an online seminar on Monday.

That disruption, which forced US car giant Ford to temporarily halt production of its Explorer SUV, "really got the attention of the White House", said Triolo.

Washington reportedly rely on Chinese rare earths for producing its defence equipment even as trade and geopolitical tensions deepen.

An F-35 fighter jet contains over 900 pounds (more than 400 kilograms) of rare earth elements, noted a recent analysis by Gracelin Baskaran and Meredith Schwartz of the Critical Minerals Security Program at the Center for Strategic and International Studies.

China has Largest Reserves

Pentagon is trying to catch up, with its "mine-to-magnet" strategy aiming to ensure an all-domestic supply chain for the key components by 2027. The challenge facing Washington to compete with Beijing in rare earths is compounded by sheer luck: China sits on the world's largest reserves.

FAQs

Q1. Who is President of USA?
A1. President of USA is Donald Trump.

Q2. What are usage of Rare earths and magnets?
A2. Used in electric vehicles, hard drives, wind turbines and missiles, rare earth elements are essential to the modern economy and national defence, AFP reported.