Special Edition: Why Focusing on China’s Response Is Far More Important for the World Than Listening to Noise from the US

Dear all,

In this special edition of ESG on Sunday: why focusing on China’s response is far more important for the world than listening to noise from US.

In 1992, standing under the skies of Baotou, Inner Mongolia—a city better known for its mines than its monuments—Deng Xiaoping looked out over a dusty expanse rich with a little-known treasure and uttered a line that would age like prophecy: “The Middle East has oil. China has rare earths.”

That was more than a boast. It was a roadmap.

Back then, few outside the industry could even name a rare earth element, let alone understand its future significance. But China knew what it had—over 30% of the world’s rare earth reserves—and, more importantly, it knew what to do with them. While oil-rich nations in the Middle East stuck to the tried-and-true model of extracting and exporting crude, China took a different path. It didn’t just dig up the dirt—it built the future. From the mine to the magnet, China constructed a vertically integrated empire around these 17 elusive elements. And now, decades later, the world is feeling the weight of that decision.

On April 4, China pulled a major lever: it clamped down on exports of six heavy rare earth elements and rare earth magnets—materials so integral to electric motors that their absence can stall assembly lines from Detroit to Düsseldorf. The new rules require special export licenses, and those aren’t easy to come by. Roughly 90% of the world’s rare earth magnets come from China. With this move, Beijing isn’t just tightening screws—it’s tapping the brakes on global manufacturing. How long before supply chains seize up? That depends on how much stock manufacturers squirreled away—and most don’t keep much.