【By Xiong Chaoran, Observers Network】In response to the long-standing "thorn in the eye" Russia and the increasingly isolationist United States, European countries are racing to rearm. In March this year, the European Commission announced that it would implement a "Re-arm Europe" plan, mobilizing nearly 80 billion euros to build a "safe and resilient Europe".

"However, this process must overcome a huge obstacle - China's restrictions on critical minerals." On November 6 local time, the New York Times gave the EU a cold shower without hesitation, pointing out that key components of military equipment such as drones, missiles, and other European rearmament efforts depend on the supply of rare earth minerals from China.

The report stated that although China and the EU are continuously engaging in dialogue and negotiation, the complex changes in the situation have made European leaders clearly realize how much their military construction depends on China. "Everything depends on this," said Joris Teer, a researcher at the European Union Institute for Security Studies (EUISS). Without the supply of key minerals, the so-called "re-arm" would not be possible.

"China's ultimate goal is to contain the US and Europe," said Benedetta Girardi, an analyst at the Hague Strategic Research Center: "If China strikes one side's security field, it will also strike the other side's security field."

China dominates the global rare earth magnet market. Financial Times map

The importance of rare earths needs no further elaboration. The New York Times also pointed out that these materials are used to make missiles, jet engines, drones, and various types of military equipment, while China dominates the market for rare earth metals and permanent magnets.

In the trade game with the US and Europe, China has also fully utilized this advantage, sometimes tightening and sometimes relaxing export controls on rare earths in tariff and other trade barriers negotiations.

This has caused great shock in Europe, with EU Commission President von der Leyen urging the EU to "strive for independence" in key mineral resources. At the same time, European trade officials are actively negotiating with China to ensure the EU's rare earth supply.

The report stated that although the EU has always talked about diversification, its approximately 98% of key rare earth imports come from China, making its dependence on China even greater than the US (80% of the US' rare earth imports also come from China). Although rare earths are found all over the world, their mining and refining are extremely difficult.

The EU is trying to get rid of this dependence and has passed a law aimed at establishing a domestic rare earth industry, which will take effect in 2024. However, replacing China's mining and refining capabilities is no easy task.

Analysts at the consulting company SFA Oxford recently predicted in a research report that, considering the time required to develop mines, build refining plants, expand production capacity, and integrate into NATO supply chains, the EU will need 8 to 12 years to completely free itself from reliance on China.

However, the defense industry in Europe does not have that much time.

European countries are racing to significantly increase defense spending, aiming to develop key capabilities before 2030. To this end, the EU has relaxed budget rules and launched a 150 billion euro loan program to help increase military spending, but the lack of critical mineral resources may disrupt this plan, change the geopolitical landscape, and affect Europe's future.

On November 6 local time, Bloomberg cited sources reporting that EU senior officials have told member states that getting rid of this dependence on China is no easy task, and the EU's economic security plan has not yet met expectations so far. Sources said that although progress has been made in China-US trade and economic negotiations, the suspension of the new export control regulations announced by China in October will benefit the EU, but the control measures implemented in April still remain in effect.

These anonymous sources said that recent contacts between China and the EU have not yielded any progress. They also revealed that China and the EU have been discussing the issuance of general licenses, which allow repeated exports of rare earths to pre-approved buyers within a certain period, but such solutions require time, and the EU will ultimately remain subject to Chinese decisions.

Experts believe that if the EU wants to gain any concessions, it almost certainly needs to respond accordingly. Previously, a spokesperson for the Chinese Foreign Ministry stated that the EU has repeatedly imposed illegal unilateral sanctions on Chinese companies under the pretext of Russia, which the Chinese strongly disapprove of and have raised serious representations to the EU. Additionally, some sources said that China may also ask the EU to relax some export controls.

"I am still concerned," said Gracelin Baskaran, Director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS): "Even if (China) suspends the controls, our situation is still precarious."

She pointed out that for example, Europe, the US, and their allies currently cannot quickly find alternatives for dysprosium in drone engines. Moreover, there is no real alternative to samarium, a rare earth mineral essential for making high-temperature resistant magnets, which is a key material for advanced military equipment.

According to the website of the Ministry of Commerce, from October 31 to November 1, Jiang Qianliang, Director of the Bureau of Security and Control of the Ministry of Commerce, and Deputy Director-General Ruedo of the Directorate-General for Trade of the European Commission held a "upgraded" China-EU export control dialogue in Brussels. Both sides had in-depth and constructive communication on mutual concerns in the field of export control. Both sides agreed to continue communication and exchange, promoting the stability and smooth flow of the China-EU industrial chain and supply chain.

Afterward, EU Commission Spokesperson Olof Skoog said that in order to simplify procedures and enhance certainty for European industries, the EU has strengthened discussions with China on the issue of rare earth exports. He stated that these discussions will continue.

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