China has built the most elegant economic power lever in modern history: rare earths

He Rare Earth Agreement announced last night says more than what appears to be a simple commercial truce: China has the most sophisticated geopolitical weapon we have seen. One that is capable of paralyzing entire sectors of any developed economy. And with the elegance of who closes a tap.

China controls the entire ecosystem of Rare earth:

• The Ganzhou mines.
• Processing plants.
• He know-how technical.
• Specialized labor.

Even the only American Mountain Pass mine Send your material to China to refine it.

It is the same difference between having oil and controlling the refineries of the world. China has built a monopoly on elements that are the blood of the digital economy:

• Without neodymium there are no wind turbines.
• No Disposio there are no Tesla engines.
• Without Terbio there are no iPhone screens.

Deng Xiaoping He saw it in 1992: “Middle East has oil. China has rare earths.” Three decades later, That prophecy is a reality and a definition of the present.

And the interesting thing is that West has financed its own vulnerability. For decades, US and European companies outsourced the extraction and processing of “dirty” minerals to China, celebrating the margins that gave them that specialization. That dependence has had a strategic cost.

And now…

The same companies that built the supply chains to maximize their efficiency now discover that they also optimized their vulnerability.

And China executes in a way we could call “civilized blackmail“. It does not close the whole tap, but it does slow down the supply with bureaucracy. Ask for forms, photos of the factories, customer listings, production details.

That, in addition to a bureaucratic nuisance, is also to open a window to the industrial secrets of its competitors. Industrial espionage, but institutionalized, disguised as commercial policy. You take it or leave it.

When he negotiates, he does it from a position of strength. The agreement, of only six months, works as a constant reminder. Each western company now knows that its production depends on Chinese benevolence. And if a geopolitical escalation of any kind arises, the industrial blackout can be almost instantaneous.

The West now discovers that economic interdependence can become a lethal weapon, because China has shown that in the technological era, who controls critical materials controls the rules.

The agreement last night postpones the moment in which the West will have to decide if he is willing to pay the price (economic and strategic) to recover his mineral sovereignty. China has won this pulse and has plenty of strength to win all the following.

In Xataka | China monopolizes rare earths. An enemy has come out of home: the smuggers

Outstanding image | Wikimedia Commons