#MarvinVasquez #BinanceSquareFamily #chips $XRP $BTC $PEPE In 1978, Chinese engineers visited two key companies in the U.S. Upon their return, an empire began: rare earths.
In the 21st century, trade wars are not fought only with tariffs, but with invisible minerals that support the technological skeleton of the modern world.
With a simple announcement, China unleashed an unprecedented form of trade war, one in which there were no tariffs or duties, but through the manipulation of a strategic resource that the West never knew how to diversify in time. Within a few weeks, the threat of scarcity of these rare earth materials and magnets has triggered warnings of paralysis in sectors that drive the world economies. The entire planet is desperately seeking what Beijing dominates with an iron fist.
The strategic origins. As we said, the partial suspension of rare earth exports by China has put governments around the world on alert, but for Beijing's leadership, these raw materials have been a priority issue for almost half a century. Unlike other powers that began to value their use later, China's interest in rare earth elements dates back to the late 1970s, when the country was trying to overcome the structural deficiencies inherited from the Maoist industrial model.
Under the leadership of Deng Xiaoping, who succeeded Mao Zedong in 1978, China became aware of the strategic value of these elements not only for their industrial utility but also for their military and technological potential. While Mao prioritized the quantity of iron and steel, without paying much attention to quality, Deng promoted a more technical and focused modernization. His executor was Fang Yi, a trusted technocrat who took office as vice-premier and head of the State Science and Technology Commission, from where he reorganized the national strategy towards a more sophisticated exploitation of mineral resources.
A decisive advantage. The turning point occurred in the city of Baotou, in Inner Mongolia, where the largest deposit of iron ore in China was located, key for military production under Mao. Fang and his team of scientists made a critical decision: to also take advantage of the significant concentrations of rare earths contained in the deposit. There were abundant light elements like cerium, useful for making ductile iron and glass, and lanthanum, essential in oil refining.
Furthermore, there were medium reserves of samarium, used in heat-resistant magnets necessary for supersonic aircraft engines and missiles. By 1978, while relations with the United States were improving, Fang was already publicly articulating the cross-cutting value of rare earths in industries ranging from ceramics and steel to electronics and defense. That same year, he took Chinese engineers to visit Lockheed Martin and McDonnell Douglas factories in the United States, a trip that would mark the convergence of industrial ambition and technological learning.
A chemical revolution. And here comes one of the keys to this dominance. The real breakthrough came when Chinese engineers managed to develop a chemical separation technique that was much cheaper than those used in the United States or the USSR. While the West relied on complex stainless steel facilities and expensive nitric acid, China opted to use plastic materials and hydrochloric acid, which are much more economical.
The use of plastic is not trivial. This innovation, combined with lax environmental standards, allowed China to flood the market with rare earths at low cost, leading to the gradual closure of refineries in the West. In fact, the process of deindustrialization outside of China consolidated the Asian monopoly. At the same time, Chinese geologists discovered that the country held approximately half of the known global reserves of rare earths, including exceptional deposits of heavy rare earths in the central-southern part of the country, key for magnet technologies in electric vehicles, medical equipment, and other critical applications.
A consummate dominance. The New York Times recalled that in the 1990s and 2000s, Chinese engineers perfected the refining of heavy rare earths, elevating China to a position of almost total dominance in this segment. Deng Xiaoping's famous phrase in 1992 ('The Middle East has oil, China has rare earths') summarizes the strategic vision that had already materialized. This policy was not left to chance: Deng and Fang trained the next generation of leaders to continue with this approach.
One of them was Wen Jiabao, a geologist specialized in rare earths, trained during the turbulent years of the Cultural Revolution. Wen, who rose to vice-premier in 1998 and to premier in 2003, stated during a visit to Europe in 2010 that almost nothing related to rare earths occurred without his direct intervention. This continuity in the political elite ensured that the exploitation, refining, and control of the global rare earth market became central pillars of China's economic and geopolitical strategy.
The economic offensive. Thus, we arrive at the current moment. The Financial Times reported that, so far, Chinese economic sanctions have been notably imprecise, based on diffuse boycotts or administrative blockades that rarely achieved their political objectives. Neither South Korea withdrew its missile defense shield after trade reprisals, nor did Australia change its foreign policy when China stopped buying its wine.
Even sanctions against U.S. defense companies were more of a symbolic gesture than a real coercive tool. But the new measures on rare earths mark a turning point: they are specific, measurable, and directly affect key industrial sectors. The threat is no longer abstract; it translates into factories on the verge of closing, blocked supply chains, and Western governments forced to reconsider their trade positions.
Everything is calibrated. The effectiveness of this offensive lies in the refinement of the Chinese regulatory arsenal. Beijing has developed a legal framework that not only restricts exports but also requires foreign companies to avoid using Chinese minerals in products intended for the U.S. defense industry. This extraterritorial clause has been designed intelligently: instead of a direct confrontation, it seeks to generate pressure among third countries, pushing them to act as diplomatic intermediaries urging Washington to soften its trade policies.
The simultaneous drop in exports to Japan, South Korea, and India shows that China is willing to accept limited economic costs in order to reinforce its strategic position and dilute the narrative of direct confrontation.
The West is late. Thus, what is most revealing is not the maneuver itself, but the lack of preparedness in the West. Since the first cut of exports to Japan in 2011, governments and industries knew that Beijing held an almost absolute dominance over rare earths and that this advantage could one day be used as a tool of pressure.
However, the responses were lukewarm: South Korea increased its reserves, Japan financed some mines in Australia, and the European Union drafted strategies that were never funded. Meanwhile, most manufacturers maintained minimal inventories of rare earth magnets, without a substitution policy or strategic stock, despite the growing rhetoric about industrial resilience.
This oversight has turned a calculated risk into an open vulnerability.
Difficult to replicate. Although some governments now call for alternative production and the European Commission brings magnets to the G7 summits as a symbol of urgency, the reality is that the structure of the rare earth market cannot be replaced overnight. Unlike high-tech products like turbines or chips, rare earth oxides are harder to track and restrict, but also more difficult to replace in quantity and purity.
China not only extracts most of these elements but also dominates the chemical separation and purification process with something as sensitive as plastic, which no one has been able to exploit, giving it a technical advantage that cannot be solved with simple investments. Even if other countries increase their extraction, the bottleneck lies in the refining capacity, which remains concentrated within its borders.
In Xataka
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Global implications. In summary, unlike countries that have reacted late to the strategic importance of these elements, China has been designing and executing a coherent national policy on rare earths for decades, based on a comprehensive industrial vision, state investment in R&D, chemical dominance in refining, and logistical control of supply.
This combination of technical planning, political backing at the highest level, and, of course, environmental tolerance allowed it to conquer the global rare earth market without firing a single shot. The partial suspension of exports is not an isolated act, but the logical culmination of a policy traced since the years of Deng Xiaoping, where technological advantage was patiently built on applied science, strategic discipline, and long-term vision.
And in the meantime, the rest of the world, now barely aware of this critical dependence, faces the titanic task of rebuilding a supply chain that clearly should never have been abandoned.
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