The leverage of China’s rare earth controls is proving extraordinary. According to Bloomberg, the European Union has recently been engaged in negotiations with Chinese authorities, attempting to persuade Beijing to lift sanctions imposed on Germany’s Sintercast Materials GmbH. The company, heavily reliant on China’s supply chain for rare earths and critical minerals, risks collapse within months if the sanctions remain in place.
On July 23, the EU adopted its 21st round of sanctions against Russia, adding 14 mainland Chinese and Hong Kong-based enterprises to its list. Within less than 24 hours, China’s Ministry of Commerce retaliated by placing 14 EU entities, including Sintercast, on an export control list, prohibiting the export of dual-use items to them. Sintercast, a firm with fewer than 50 employees headquartered in Bavaria, specializes in sputtering targets, precision coatings, and lanthanum hexaboride cathodes—materials that may sound niche but are integral to ASML’s lithography equipment supply chain. Specifically, it produces the nanoscale coating applied to optical lenses in these machines. The critical issue is that nearly 100% of its rare earth raw materials originate from China.
Following the imposition of sanctions, German officials swiftly intervened, seeking alternative suppliers, exploring material recovery options, and mobilizing financial support. However, after several months of effort, no viable solution has emerged. Sources familiar with the matter indicate that without swift resolution, the company faces insolvency within the coming months. On October 9, EU Trade Commissioner Valdis Dombrovskis traveled to Beijing for two days of talks. One key outcome was an agreement to “substantially initiate the mutual delisting process”—in plain terms: the EU would lift restrictions on one Chinese entity, while China would remove Sintercast from its control list.
Over the past two years, the EU has repeatedly emphasized the need to “de-risk” its economic ties, launching initiatives such as strategic stockpiling of critical minerals, strengthening partnerships with the United States, and committing €3 billion to support domestic projects. Yet a clear reality remains: Europe’s technological advantages in high-end manufacturing do not guarantee independence from upstream Chinese raw materials. The bilateral economic relationship between China and the EU is deeply interdependent. Should Europe adopt unfair trade protection measures, the resulting countermeasures would inflict significant costs on European industry.
Original source: toutiao.com/article/1879180440130572/
Disclaimer: This article reflects the personal views of the author.