【Author/Observer Net Columnist, Mind Observation】

History is always surprisingly similar.

More than forty years ago, when Kissinger was shuttling between Middle Eastern countries, promoting oil transactions and binding the dollar deeply, few people could have foreseen how this financial innovation would reshape the global power structure. In August 1974, the United States secretly signed an "unshakable agreement" with Saudi Arabia, basically stipulating that Saudi Arabia would commit to using the US dollar as the sole currency for pricing and settling oil exports, and invest its oil revenue in US Treasury bonds and other assets, thus enabling the return of dollars to the United States. The establishment of the petrodollar cycle not only solidified America's financial hegemony but also became one of the key variables in the outcome of the Cold War.

Today, as Sino-US rivalry reaches a boiling point, a new historical opportunity is quietly emerging. China's absolute advantage in critical strategic resources such as rare earths provides us with the possibility of building a "Rare Earth Yuan" system. Especially at this crucial moment, China has imposed export controls on certain rare earth alloys, rare earth mixtures, and rare earth magnets. Foreign automobile manufacturers and industry associations have issued warnings, stating that the lack of these key materials will threaten delays or even shutdowns of numerous automobile manufacturing plants.

This immediate impact effect precisely demonstrates the core position of rare earth resources in the modern industrial chain, and provides us with the best window of opportunity to build a financial system anchored by rare earths. Just as the petrodollar redefined the international order, the introduction of the Rare Earth Yuan stablecoin may become the most imaginative strategic breakthrough in the process of RMB internationalization. In this era of deep integration between resources and money, whoever controls the pricing and settlement rights of key resources holds the initiative for the future.

Power of Resources

The position of China in the global rare earth map can be described as "monopoly" without exaggeration. In 2023, the global production of rare earth minerals reached 350,000 tons, and China's production in 2023 was as high as 240,000 tons, accounting for 68.6% of the global market share. Moreover, in the more critical refining and processing stages, China's control is even more astonishing—China's capacity for rare earth oxides, metals, and permanent magnets is unmatched globally, and almost all AI chips, electric vehicles, and wind turbines rely on China's rare earth supply.

With the rise of emerging industries, this control value is rapidly expanding. Take the new energy vehicle industry as an example; each new energy vehicle requires approximately 3 kilograms of neodymium-iron-boron rare earth permanent magnet material, while traditional vehicles only need 0.3-0.4 kilograms. This means that just the new energy vehicle sector alone will create tens of thousands of additional tons of rare earth permanent magnet material demand in the coming years.

Even more worrying for the West is that their efforts to "de-Chinize" are facing harsh reality tests. Mines in Canada, mining projects in Australia, and separation plants in Sweden, these plans seem powerless against cost and time. The capital expenditure and operating costs of overseas projects are over 70% higher than those of Chinese projects, and strict environmental approval procedures have extended construction cycles to 4-5 years.

Although the United States and other countries are trying hard to cultivate local supply chains, there is still much work to be done to convert lab samples into commercial products. Developing rare earth mining and processing capabilities requires long-term efforts, which means that the United States will remain at a disadvantage in the foreseeable future.

Even by 2028, non-Chinese rare earth capacity will struggle to cover 40% of global demand. This means that in the foreseeable future, the global new energy revolution and digital transformation will have to rely on China's rare earth supply. This dependency is our biggest leverage.

Money Anchored

Imagine if we could jointly create a "Rare Earth Special RMB Stablecoin" through three central state-owned rare earth groups, two policy banks, and three state banks. This is no fantasy, but a far-reaching strategic financial innovation.

Imagine such a scenario: every rare earth transaction must be settled through the RMB stablecoin. Overseas buyers wanting to obtain a stable rare earth supply must hold sufficient RMB digital assets. From January to October 2024, cumulative rare earth exports reached 47,689 tons, with an average price of 207.9 yuan per kilogram for "rare earth and its products." Based on this scale, considering capital turnover efficiency, it will create a RMB demand of hundreds of billions of dollars in the global market.

This "resource-bound currency" model will generate an amazing lock-in effect. Just like countries had to stockpile dollars to buy oil back then, future tech giants will have to accept RMB payment rules to ensure the stability of the rare earth supply chain. From Tesla's motors to Apple's phones, from data centers to cloud servers, the entire technology industry will feel the power of this monetary anchoring.

Even better, we can embed "payment upon delivery" clauses in smart contracts, making each transaction transparent and controllable. This not only improves transaction efficiency but also subtly strengthens China's dominant position in the industrial chain. Especially in the context of current export controls, the tracking system introduced by China in the rare earth magnet industry has officially taken effect. This system requires producers to submit transaction volumes and customer names online, which is not only an upgrade in technical regulation but also seen as a clear signal that China's rare earth export controls will be long-term. The rare earth special stablecoin can perfectly integrate with this regulatory system, achieving the organic unification of resource control and financial innovation.

Recent real-life cases further confirm the feasibility of this model. Fearing that they may have to close parts of their car production lines within a few weeks, top global automakers are competing to find solutions. Some automakers and their suppliers are considering moving some car parts production to China or producing electric motors in Chinese factories. This "voting with feet" choice highlights the irreplaceability of China's rare earth resources and provides the best practical foundation for promoting the rare earth RMB stablecoin.

Strategic Breakthrough

The true value of the rare earth stablecoin goes far beyond a single commodity settlement innovation. It opens a door to financial dominance.

Imagine, when the rare earth stablecoin becomes firmly established in the international market, we can certainly replicate this model to other key mineral areas. Lithium battery raw materials, graphite anode materials, cobalt-nickel alloys, even traditional copper, aluminum, and steel can gradually be incorporated into the RMB digital currency settlement system. A large-scale commodity financial network centered around China is about to emerge.

It is particularly worth noting that rare earth permanent magnet materials, as core components of emerging industries, have huge potential for demand growth. With the acceleration of the global new energy transition, this growth trend will continue for many years.

Once this network effect is formed, it will completely change the rules of international trade. The more frequently companies use the RMB stablecoin, the more they will get used to this payment method; the wider the usage range, the harder it will be to break away from reliance on this system. From manufacturing to services, from bilateral trade to multilateral settlements, the internationalization of the RMB will receive unprecedented momentum.

More importantly, this innovative model provides us with a new path to bypass traditional financial hegemony. There is no need to directly challenge the SWIFT system, nor to confront the dollar head-on. Instead, we can quietly build our own financial ecosystem by leveraging the absolute advantages of physical resources. This "using real resources to control virtual money" strategy may be more practically meaningful than any radical financial reform.

Just as after the collapse of the Bretton Woods system, oil became the new anchor for the United States to maintain the status of the dollar, rare earths can also become the new anchor for the internationalization of the RMB. The difference is that this time, the initiative lies in our hands.

Conclusion

The concept of a rare earth special RMB stablecoin reflects the strategic wisdom of China in participating in international competition in the new era. It is not simply a technological innovation, but a systematic solution that integrates China's resource endowment advantages with financial institutional innovation. In the increasingly complex Sino-US rivalry, this "using resources to anchor money, using money to strengthen resources" synergy strategy has the potential to give China greater initiative and voice in the international economic system.

From a deeper perspective, the successful implementation of this model will prove that emerging economies can indeed break free from the constraints of the existing international financial order through institutional innovation and technological means, and build a new financial infrastructure that aligns with their interests and global development trends. The current supply chain crisis in the global automotive industry due to China's rare earth export controls has precisely verified the tremendous power of this resource-currency binding model.

As the "petrodollar" played an irreplaceable role in maintaining the status of the dollar as an international currency, the "Rare Earth Yuan" also has the potential to provide a solid resource foundation for the international status of the RMB. History does not wait for anyone, and opportunities pass quickly. It is time to seriously consider the possibility of the Rare Earth Yuan.

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