China’s dominance in the rare earth industry is challenged by a significant structural flaw, as highlighted in a recent study. The US and Japan hold most core patents for advanced rare earth functional material technologies, impacting China’s position in the sector. Downstream products from processed rare earths, such as permanent magnets and catalysts, constitute over 80% of rare earth-related patents globally, emphasizing their commercial importance.
Japan leads in permanent magnets technology, while the US excels in core technologies related to catalytic, luminescent, and polishing materials. In contrast, China’s technological advantage is limited in these areas, lagging behind Japan and the US in crucial manufacturing processes and material systems. Despite China’s dominance in rare earth mining and processing, it does not have similar control over higher-value technologies derived from them, the study notes.
China’s strategic advantage in rare earth resources has not translated into dominance in advanced technologies, a key observation from the study. While China accounts for a significant portion of global rare earth mining and processing, its innovation system and international patent filing practices limit its influence in high-value technologies. The study also points out the lack of coordination among universities, industry, and intellectual property management as a hindrance to commercializing scientific advancements.
China has strategically used its rare earth dominance as an economic leverage tool, exploiting Western reliance on these materials for defense systems, renewable energy technologies, and consumer electronics. This strategic approach has been part of China’s trade and strategic competition tactics with the US, showcasing the multifaceted implications of rare earth resources in global geopolitics.
