rare earth Photo:VCG

US Treasury Secretary Scott Bessent convened finance ministerial on securing critical minerals supply chains on Monday local time, claiming that these supply chains have become “highly concentrated and vulnerable to disruption and manipulation.”

Although China is not yet mentioned in the press release, some Western media, including Reuters and Bloomberg, have connected it to China’s rare earths. In an earlier report, Reuters said a US official said on Sunday that Bessent was going to urge participants to step up efforts to reduce reliance on critical minerals from China.

Chinese experts said that it showed deep concern and anxiety of US and some countries over China's advantages in the rare earth industry, noting that addressing structural challenges in the supply chain requires genuine cooperation among all parties, rather than attempts to act within a limited geographic or political framework.

According to a press release by the US Treasury Department, attendees included officials from the G7, the EU, Australia, India, South Korea and Mexico. Throughout the course of discussions, attendees expressed a strong, shared desire to quickly address key vulnerabilities in critical minerals supply chains. 

Bessent expressed his optimism that nations will pursue prudent derisking over decoupling, and that they understand well the need to remedy current deficiencies in critical minerals supply chains. Noting that these supply chains have also become highly concentrated and vulnerable to disruption and manipulation, the Secretary urged attendees to increase their supply chain resiliency.

Although the press release did not mention China, but some foreign media connect it to China’s rare earth industry. For instance, Reuters said in a report that finance ministers from the G7 and other major economies met in Washington on Monday to discuss ways to reduce dependence on rare earths from China, including setting a price floor and new partnerships to build up alternative supplies.

“It demonstrates, to some extent, that the core target of the conference is still China’s rare earth industry,” Jian Junbo, director of the Center for China-Europe Relations at Fudan University’s Institute of International Studies, told the Global Times on Tuesday.

On one hand, these countries remain heavily dependent on China’s rare earth supply; on the other hand, they have deep concern and anxiety over China's advantages in the industry, Jian noted.

The US used the pretext that critical minerals supply chains are “highly vulnerable to disruption and manipulation,” but in essence, this is just the same old “derisking” mindset toward China, Jian said, noting that China’s export control measures on rare earths are taken in accordance with law and regulations, and fully comply with WTO rules.

China conducted a thorough assessment in advance of the potential impacts that these measures may have on production and supply chains, and is confident that the relevant impacts are very limited. China’s export controls do not constitute a prohibition on exports. As long as the applications are for legitimate civilian uses and comply with regulations, they can be approved, a spokesperson from China’s Ministry of Commerce said in October.

According to Bloomberg, Italy’s Finance Minister Giancarlo Giorgetti said in a statement that “this is a concrete and positive step towards building resilience in critical raw materials on which Western countries are almost totally dependent.” German Finance Minister Lars Klingbeil told reporters after the meeting that “I think it is right that the Americans are putting so much pressure on this issue.” “However, there are a number of questions that remain open and need to be clarified in the coming weeks,” Klingbeil said. 

The significant differences among countries in terms of resource endowments, fiscal capabilities, and demand structures make the so-called cooperation extremely complex when it comes to actual implementation, Jian said.

Gao Lingyun, a researcher at the Chinese Academy of Social Sciences, told the Global Times on Tuesday that US’ attempt to ensure the security of its so-called critical materials supply chains through a bloc-oriented approach is highly improbable and largely unfeasible, as the rare earth industry goes far beyond simple extraction, processing and end use, involving multiple complex links across the value chain. 

“Addressing structural challenges in the supply chain requires genuine cooperation among all parties, rather than attempts to act within a limited geographic or political framework,” Gao added.

Reuters reported that Japanese Finance Minister Satsuki Katayama told reporters on Monday evening that there was "broad agreement on the need to swiftly reduce reliance on China for rare earths." She claimed she outlined short-, medium- and long-term policy approaches for G7 and like-minded countries to bolster non-Chinese rare earth supplies.

Commenting on that officials from the G7 and other countries are meeting in the US to discuss rare earth supply chains, and Nikkei has also reported that Japanese companies are having difficulty getting rare earth supplies for civilian use, Mao Ning, spokesperson from China’s Foreign Ministry, told a press conference on Monday that China stepped up export controls of dual-use items toward Japan to safeguard national security and interests and fulfill international obligations such as non-proliferation. The measures are fully justified, legitimate and lawful. 

On keeping the global industrial and supply chains of critical minerals safe and stable, China’s position has not changed. All parties have the responsibility to play a constructive role for this end, Mao noted.