'Resource Weaponization' by China... OECD: "China's Mineral Export Restrictions Increased Fivefold in 10 Years"

China's export restrictions related to critical minerals have increased more than fivefold over the past decade. Analysts interpret this as a result of China's blatant 'resource weaponization' in response to containment efforts led by the West, including the United States, against China.

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According to a report by the Organisation for Economic Co-operation and Development (OECD) on the 11th (local time), China had implemented over 13,000 export restrictions related to critical minerals as of the end of 2020. This represents more than a fivefold increase compared to ten years ago. The OECD estimated that China's restrictions surged significantly after 2020, when tensions between the U.S. and China intensified.

In particular, China strengthened regulations on the rare earth market among critical minerals. Export restrictions on certain raw materials needed for renewable energy and electric vehicles expanded ninefold during the same period. Foreign media viewed this as an intention to control exports and discipline other countries amid the global dependence on Chinese resources. Recently, in response to the U.S., Japan, and the Netherlands coordinating advanced semiconductor equipment export controls targeting China, it is reported that China plans to introduce export controls on technologies related to rare earth magnets.

China holds overwhelming influence in the critical minerals market. It dominates the rare earth market used in nearly all advanced products and fighter jets. For key electric vehicle battery materials such as lithium, cobalt, and manganese, securing minerals without relying on China is difficult. China’s share in the markets for high-performance rare earth magnets, neodymium and samarium-cobalt, reaches 84% and 90%, respectively.

This resource weaponization by China is expected to act as a barrier to global climate change efforts. For example, electric vehicles use more than three times the amount of copper compared to internal combustion engine vehicles. Due to the shift to electric vehicles, demand for lithium, a major battery component, is projected to increase more than fivefold over the next decade. China’s export controls could raise energy transition costs and hinder industrial transformation.

Currently, governments worldwide are expanding the use of renewable energy to reduce carbon emissions in line with climate change agreements. Automakers in the U.S. and Europe plan to reduce or halt production of internal combustion engine vehicles to address climate change.

Despite these concerns, China’s trend of resource weaponization is expected to intensify. The escalating U.S.-China tensions are cited as the primary cause. Additionally, there are concerns that other resource-rich countries might follow China’s lead and leverage critical minerals as a bargaining chip. According to the OECD survey, after China, India, Argentina, Russia, Vietnam, and Kazakhstan ranked highest in the number of critical mineral export restrictions introduced.

The OECD analyzed, "Industrialized Western countries have particularly high import dependence on non-OECD countries such as China, Russia, and South Africa, and there is a tendency for production concentration in these countries to increase further," adding, "Export restrictions could worsen the situation. The impact on the global economy is also significant." One foreign media outlet noted, "The division of the world economy increases the cost of renewable energy transition and shows that (international hegemony) could shift from industrialized Western countries to resource-rich countries."

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