There is oil in the Middle East; there is rare earth in China". Western and Japanese policy makers might have remembered this proclamation from Deng Xiaoping in 1992, when 18 years later China blocked shipments of rare earth elements and alarmed Japan, the European Union (EU), and the USA. Rare earths are not widely known, because they are low on the production chain and comprise only a small industry with annual production of below 150 000 tons. But without them, many modern daily-used electronic applications from smart phones to green energy applications would not be possible and our modern way of life would look very different. Already since 2006, China step by step reduced the exports. It is not very clear yet, why China restricts the exports of rare earths elements. This paper analyses possible motivations of China which might be geopolitical, neo-mercantilist, political, environmental or simply economic in nature. The European Union has recently announced global raw material diplomacy. The goal of this paper is to evaluate China's ambitions in its rare earth elements strategy and, against that background, explore the potential account of EU's new foreign trade instrument. The paper concludes skeptical, since China follows a strategy in one piece, whereas the EU strategy appears as too general and too diversified. A chance for the EU and other concerned actors like Japan and the USA lies in a better coordination of their rare earth policies and a more sustainable approach, also towards third countries. The World Trade Organization is positive towards the concerns of China's rare earths customers.
Tamkang Journal of International Affairs 15(2), pp.43-85