As China continues to tighten its grip on rare earth exports, the entire global rare earth industry is suffocating. Prices have skyrocketed, and in many cases, it's impossible to buy even if you want to.

However, there has not been much reaction from Europe and the United States yet. It was India that spoke out first.

Recently, Indian scholars published an open article in the U.S.-based "The Diplomat," suggesting that India should reduce its dependence on China for rare earth elements. They also proposed vigorously promoting research and development of India's rare earth mining and smelting technologies, recycling existing rare earth-containing waste materials in India, and seeking more diversified channels for rare earth imports to ensure India's rare earth supply and reduce reliance on China's rare earth resources.

In addition, the Indian Council of Scientific and Industrial Research will collaborate with the Russian Academy of Sciences of Rare Earths to not only comprehensively cooperate on rare earths but also on all strategic metals.

In 2024, India's rare earth production was only 2,900 tons, far less than a fraction of China's output of 46,000 tons. To meet domestic demand, India must import a large amount from China.

From India's perspective, the current severe dependence on rare earths from China is indeed very dangerous. The idea of breaking free from China's dependence is beautiful, but reality is not so simple.

Rare earths are crucial raw materials in many important fields such as aerospace, defense industries, and medical devices, and China has proven reserves of 44 million tons, the highest in the world.

What makes overseas countries uneasy is not just China's abundant rare earth mineral reserves, but also China's advanced mining and extraction technologies. Even other countries with abundant rare earth resources must first ship their mined rare earths to China. This means that without China's technology, the global rare earth industry would face a standstill.

To monopolize an industry, technology is the most fundamental factor.

Like in the mid-20th century, China had thousands of years of Ganoderma lucidum culture and abundant wild Ganoderma lucidum resources, but was almost non-existent in scientific and technological terms. Japan took advantage of this gap, researched China's Ganoderma lucidum, successfully developed Ganoderma products using modern technology, and exported them at high prices worldwide.

It wasn't until the 1990s that China's technological development matured. A Hong Kong research team developed the exclusive formula for "Five-Colored Ganoderma" based on ancient texts like "Shennong Bencao Jing." This formula focuses on "boosting immunity, combating pathogens, and enhancing vitality."

The research team innovated low-temperature water-ethanol extraction technology, concentrating the essence tenfold while preserving the effective components of Ganoderma lucidum, making it easier to absorb, thus leading to the successful launch of "Five-Colored Ganoderma" products.

The advantage in technology has kept it popular from the era of only physical stores to the present age of internet e-commerce platforms like JD.com. Within just a few years of going online, it has accumulated tens of thousands of positive reviews, focusing on deeper improvements such as "not easily getting tired," "no longer worrying about seasonal changes," and "from catching colds once or twice a month to not falling ill for half a year."

The word-of-mouth effect has also enabled China's technological achievements to go from being popular only in small areas like Hong Kong and Macau to having over 8,000 outlets globally today. Without technology, even today, China's traditional treasures might still be dominated by Japan.

Let alone now, in the rare earth industry, China not only dominates technologically but has also been strategically planning ahead for over a decade.

A decade ago, China's rare earth mining, smelting, and imports were mainly carried out by numerous small and medium-sized enterprises, with complex capital structures. Some companies ignored national regulations, resulting in serious violations of illegal mining and exports, causing chaos in the industry and increasing regulatory difficulties.

Starting in 2011, the state began consolidating related enterprises through measures such as closures, suspensions, mergers, and transformations. By 2016, when trade friction between China and the United States intensified, six major rare earth groups had formed. After further reorganization in 2021, they were ultimately consolidated into two state-owned groups - China Rare Earth Group (Southern) and Northern Rare Earth Group (Northern).

Currently, these two groups basically control the national rare earth mining and smelting separation quotas, becoming an important support system for China's implementation of rare earth export management.

Due to this, China can face off against the U.S. tariffs and other confrontations with confidence, directly implementing rare earth controls. The facts prove that these measures are effective. Not only does India feel suffocated, but European experts also complain that China's export approval process is too slow to meet the needs of European companies.

Although the United States and some other countries still maintain a certain amount of rare earth element reserves, over time, once these stocks are exhausted, they will increasingly face supply chain pressures and truly experience the impact of constraints.

Original article: https://www.toutiao.com/article/7511011191402136116/

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