Name: China controls rare earths. But for how much longer? | The Dip Podcast
Uploaded: 2026-02-10T17:30:12.000Z
Duration: 11 min 41 s
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Adverbs of degree

This whole rebalancing, I mean, it's a real place where the geopolitics and the economics really meet.

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The west has suddenly thought, well, we need to do something about this, and

we need to secure our own supply chain, and

we have to make sure we have our own critical minerals.

The US Is clubbing together with other nations to make a critical mineral alliance.

Well, to counter China's dominance, of course, but can the west really overcome its dependence on China?

And when we have China question, we go to our China analyst, Clifford Koonin, who has more with us right now.

So, Clifford, what is this alliance all about?

I mean, China's name didn't come up in the government fact sheet, which was all about the alliance, but

yet it is really the elephant in the room here.

Yeah, well, these critical minerals, they're essential for use in semiconductors, in your iPhones, in all your various.

They're just used as components to make components for so many different things that people use every day.

And most people, you know, most of them come from China.

China has got the best developed industry for producing critical minerals and raw rare earths.

So basically that means that when the U.S.

for example, instigated the trade war with its trade tariffs, China was just able to say, okay, we're keeping.

So basically, the Trump administration caved.

So they're clearly, they're a great bargaining chip for the Chinese.

And with this in mind, the west has suddenly thought, well, we need to do something about this, and

Now, this has seen a lot of people going to Africa, seen a lot of people going to South America from the west looking for their own resources.

But then recently, Scott Besant and Marco Rubio in the US have sort of decided that they wanted to.

To form some kind of Western alliance where they will all secure the supply of rare earths.

And the big thinking behind this is because Donald Trump is going to China in April, and

he wants to have something big that he can deliver.

So the expectation is that they will come up with this alliance of all these countries with the rare earths and critical minerals by that time, which, as we know from all of these trade agreements and everything like that, they just don't happen that quickly.

So that's basically the background, and it's kind of an interesting idea, actually.

And maybe with a Different administration, it would be, you know, it would be sort of more credible.

It's just everyone's feeling a little bit battered at the moment.

I mean, even thinking about this is exhausting, you know, because we just had weeks of real antagonism from the US and then suddenly you come around and say, we want to be your friend, you know.

So it's just, it's a pretty challenging prospect.

So what we've seen is a lot of European leaders say recently, Clifford, that they want more sovereignty.

We saw that in Davos at the World Economic Forum.

Even Mark Carney from Canada, the Prime Minister, said pretty much the same thing.

And yet he's been to China to make deals.

Keir Starmer from the UK has been to China to make deals.

Of course, the complicated thing which I want you to kind of unravel here is just going and saying we're going to do some business with China, necessarily itself a bad thing.

You can't cut off all ties all of a sudden overnight.

On the one hand, building up this alliance to have more sovereignty and on the other hand doing business deals with China.

I mean, let's just cast our minds back a few years, say 20 years when China was starting to emerge.

And you'd have these trade delegations that would go to China with the head of state, the German Chancellor would go once, sometimes even tw a year.

They would come with these glistening, shining, fantastic industrial products that China lapped up and they would make billion dollar, billion dollar trade deals.

They'd buy, you know, engines, they'd buy technology, they'd buy all of this sort of stuff and then the, the European leader would read out the list of human rights issues that it had and the Chinese would nod and, and

And, and you know, the economy just grew.

China then took, they, you know, as part of the deals, they, there was technology transfer.

They were required to give insight into how the technology worked which helped China build up this incredible industrial story that is China now.

I mean it's, it's, it's, it's catching up on, on the west, on many, many high tech fronts.

But it really is quite an incredible story as we all know.

So suddenly when these Western leaders arrived and that was what was really interesting, looking at Keir Starmer and looking at, you know, Macron even, you know, how the attitude has changed because China just doesn't really need them anymore.

And that's a different, that's a complete shift because China has suddenly it's Europe has become a way of offsetting the market that it's lost because the US has basically closed.

I mean there's about a half a trillion dollars worth of exports goes to the EU from China.

Last year in the US it was nearly half that and it had dropped by, it was about 280 billion and that was down from 430 billion or something in that direction.

So you can sort of see that it's a real, it's a major, major change in things.

And the other thing about the EU leaders going on their own, first of all, China doesn't need them.

And China also sees a way to kind of divide the EU a little bit because a lot of people see a lot of the bigger nations see the eu sorry, see China as a strategic competitor.

And you don't hear that language so much now from the big EU countries, but

you are seeing divisions in how the EU reacts because China really only worries about the EU when it's dealing with a bloc.

That's how these power blocks work, you know.

And then when you've got, you know, Ireland and the Finns and okay, I know the UK isn't in the EU anymore, but

But the UK is part of this alliance, this critical minerals alliance with the US that fits into that whole modus operandi.

Like if we club together then China's going to find it more difficult to divide and rule.

And then just to sort of shift perspective a bit over to this, you know, this US idea about critical minerals, they're also trying this thing, Pax silica, which is a sort of a, again an alliance to combat China's increasing dominance in semiconductors.

Scott Bezant, the Treasury Secretary mentioned at Davos, I think where he was saying the 97% of the high end semiconductor chips are made in Taiwan.

And this was possibly one of the biggest weaknesses in the global economy.

Because if that suddenly, if that situation were to change where the US were China to invade Taiwan, then suddenly you're going to have a massive rebalancing of global power.

And he's also said the same thing about critical minerals.

You know, he said that China's dominance is extremely dangerous.

And he's talked about his own state, South Carolina, where they've started to do critical minerals again.

And he reckons that they're going to be able to, you know, they'll be up and running within two years.

So this whole rebalancing, I mean, it's a real place where the geopolitics and the economics really meet.

Because you know, where previously military muscle was how you kind of backed up, how you backed up your, your ambitions, your diplomat ambitions, your political ambitions, now it seems to be raw materials, it's buying power, it's imports, exports, it's investment.

I think that, you know, they often talk about sanctions being, as being sort of choke points, you know, that you can, you don't really need to use your army anymore, although it helps to have a big one but, or a powerful one, but

So I think it's very interesting where the way all of these things are emerging right now.

But it's interesting too because so many of these things are related.

If you want to have the newest defensive gear, smart weapons and so on, you need these raw materials to make it work.

You've hinted at this a little bit, Clifford, but

I'm wondering in your view, how dependent is Europe on China?

Well, this is a really interesting point.

The problem for Europe now and Germany, let's use Germany.