The imposed obligation by Beijing to German companies to provide sensitive information to continue importing rare earths is not a mere administrative procedure, but a full-scale transfer of industrial intelligence, one in a context in which Germany faces the risk that this data will be used for a wide variety of formulas.
Asymmetric dependency. The new ones chinese controls require forms with a level of unusual detail (from product photos showing where the rare earths are housed, to manufacturing diagrams, customer lists, three years of production data and future projections).
Why does it matter? Because they will allow Beijing to rebuild with precision which companies depend from a single supplier, who operates without an inventory buffer, where a delay in licensing would stop an entire sector and how that dependence branches out into subsequent value chains.
Plus: the German industry accepts because there is no room for maneuver: with the 95% of supply coming from China, refusing is equivalent to stopping, and the rotating nature of the six-month licenses turns material dependence into periodic renewal of obedience.
Germany provides information. Bloomberg counted that, while Beijing accumulates data that allows it to control the deep level of European industry, the German government does not have of that same visibility on their own industrial champions: the official questionnaires were not answered, the meetings did not yield information and any attempt to impose mandatory nature would clash with a political climate saturated by the promise of reducing bureaucratic burdens.
This produces a strategic paradox: that China knows more about the German industrial anatomy than Germany itself, and the information asymmetry increases just when the country becomes more dependent on external supplies and more vulnerable to selective interruptions.
From commercial tool to pressure instrument. He licensing mechanism is inserted in a dynamic that transcends trade: if Washington used China’s dependence on American technology as a weapon, Beijing responds using its supremacy in critical materials to force European concessions.
The “white list” of the German embassy (designed to prioritize licenses for large groups) revealedFurthermore, unintentionally, what are the nerves industries that Berlin cannot afford to lose, providing China with a guide to apply surgical coercion. The data allows not only to interrupt civil production but also to infer the structure of the European defense industrial base in the midst of a rearmament cycle precipitated by Ukraine.
Coercion and fragmentation. Bloomberg explained that China already suggests implicit barter (lower limits if Europe loosens technological restrictions) exploiting low German internal cohesion: companies demand public compensation To diversify, the government responds that ensuring supplies is a private duty and both postpone decisions because diversifying costs capital, time and reputational risk.
At the same time, Beijing prefers negotiate bilaterally with Berlin before the EU to maximize leverage, and Merz arrives at that table without any real ability to threaten replacement because any swap chain makes the final product more expensive and erodes competitiveness, making it more expensive to leave than to remain trapped.
Second China Shock. Plus: there are many analyzes that agree that Germany is the most exposed European country to the so-called “Second China Shock”: China’s turn from key customer to competitor with overcapacity in automotive, batteries and solar, supported by a post-pandemic trade surplus that has reached historical levels and fuels an export wave that is difficult for German industry to absorb.
The result is downward pressure on prices and margins, a drop in orders for machinery and cars, labor conflicts and retrenchment or relocation plans while the Chinese market brings fewer benefits and more rivalry.
Minerals add fuel. This vulnerability is aggravated by the new regulatory coercion of Beijing on critical minerals that we had (which extracts intelligence from supply chains and can interrupt inputs), so that the same Germany that led the European export model now suffers a clamp: subsidized competition from Chinese “surpluses” in key sectors and dependence on essential materials controlled by China.
In fact, think tanks and organizations they document it: from that diagnosis from the “China shock 2.0” focused on automobiles and machinery, to the rebound in the Chinese surplus and the expansion of quotas in cars, to the reports on overcapacity and distortions in EVs and photovoltaics, and the deterioration of German manufacturing performance with China going from demand engine to systemic rival.
Strategic lesson. If you like, if we broaden the focus, the framework should not surprise Beijing much: years of warnings about its intention to dominate bottlenecks are now being revealed. materialize in rules that turn industrial dependence into political leverage.
Controlling rare earths not only ensures tapensures the complete map of the rival’s pipes and valves. Under this architecture, China does not need to cut off flows: it is enough to condition its renewal and demand intelligence in exchange for Europe to pay, again and againhe privilege to continue depending.
The underlying warning is crystal clear: those who delay diversification do not freeze the risk, they capitalize on it in favor of the supplier.
Image | Uwe Aranas, Ra Boe/Wikipedia
In Xataka | China opted for rare earths as the key to its global influence. A country has bypassed that lock
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