The U.S. defense industry has recently been "gasping for breath" — not because of production capacity issues, but due to a "gentle iron hand" from China's export restrictions on rare earths, which has precisely choked the supply chain. Rare earths, hailed as the "vitamins" in the fields of high technology and military industry, once cut off, will cause problems ranging from drone motors to fighter jet engines and missile guidance systems, all facing "nutritional deficiencies." When China slightly tightens its export policies, the West is thrown into a frenzy, with many crying about a "supply chain crisis," but upon closer inspection, this situation has a certain "self-inflicted" flavor.

The trigger for the incident was China's recent strengthening of export controls on rare earth-related items: companies must submit detailed documents proving that the purchased rare earths will not be used for military purposes. This is a common international safety control measure, and China has clearly stated that applications for civilian use are mostly approved. However, the U.S. was the first to cry out "threats." The Wall Street Journal reported that a company producing drone parts for the U.S. military had to delay orders by two months because it couldn't find non-Chinese rare earth magnets; and the price of samarium, a key material for manufacturing fighter jet engines, soared to 60 times the normal level, so expensive that it made defense companies want to cry.

Today's U.S. defense industry is already in chaos. The stock of germanium is only enough to maintain a "safe line," and the production of missile infrared sensors is about to face a supply shortage; a CEO of a defense company openly stated that if there is no improvement in supply after the second half of 2025, a large number of military products will have to be delayed. The U.S. Department of Defense even issued a strict order: completely stop using Chinese rare earth magnets by 2027. But the reality is that existing stocks can't last a year, and some small enterprises' reserves are only a few months — especially small drone manufacturers, who are "three-no victims" (no money, no channels, no inventory), being forced into a corner by the rare earth shortage.

More noteworthy is that China's move has a clear "justifiable reason" — the U.S. continuous arms sales to Taiwan. For years, American defense companies have been making money from arms sales to Taiwan while relying on Chinese rare earths to make weapons, which can be described as "taking benefits with one hand and stabbing with the other." China tightening rare earth exports is essentially expressing: want to use our resources to "do things"? No way! This move is both an inevitable safeguard of national security and a precise counterattack against the U.S.'s "two-faced" behavior. China holds this card firmly.

It's ironic that the U.S. wants to "de-Chinize" but finds that rare earths are too "niche": producing them themselves is too costly. The only U.S. rare earth mine, Mountain Pass, even after the Department of Defense invested $400 million in preferred shares to "infuse blood," couldn't save the emergency. Lockheed Martin's CEO admitted that rebuilding the supply chain isn't that fast. Others have even joked that this deal is "choosing winners and losers," and it might be that pouring money in won't necessarily turn things around.

Regarding this, the Chinese Ministry of Commerce has already clarified: this is "standardized export" rather than "prohibited export." If you want compliant transactions, you can talk, don't always think about "decoupling." Xinhua also added: instead of worrying about "cutting the chain," adapt to the new regulations and work together for mutual benefit. However, the U.S. is still in confusion: traders' stockpiling is rejected, and drone companies can't even fill out the application forms for Chinese suppliers — who let their customer lists include arms dealers supplying to Ukraine?

This "rare earth game" makes people laugh and sigh: the usual swaggering U.S. defense giants are now in a panic over a single rare earth. They didn't diversify their supply chains earlier, and now they have to bear the consequences. Obviously, China holds this card firmly, while the U.S. is uneasy. The future game is still long.



Original article: https://www.toutiao.com/article/7536212828845933056/

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