Steering A Middle Course: The Domestic Sources of China’s Rare Earth Strategy

Abstract

Abstract China’s recent use of rare earth (RE) as a tool in handling interstate crises has aroused global concern. However, popular narratives misinterpret China’s RE strategy, tending to exaggerate its assertiveness and possible ill effects on the international community. Pundits and scholarly works usually take China’s so-called weaponization of RE for granted, thus overlooking the domestic reasons for such policymaking. Using the advocacy coalition framework, this article examines the domestic sources of China’s policymaking, focusing on the academic, corporate, and policy practitioners that have frequently influenced the RE policy determination process. Three factors are highlighted, namely: (1) technical information concerning the minerals and the industry; (2) the system structure, characterized by state actors’ state-capitalist industrial integration, and certain actors’ resistance to it; and (3) the belief system implied by resource nationalism, which is also challenged. After weighing the pros and cons and examining the balance of competing domestic interests and beliefs, the analysis finds that China has been steering a middle course in its use of RE as a tool of economic statecraft. China’s RE strategy is found mostly to serve economic interests and, by extension, to help China gain the upper hand in great power high-tech competition. In foreign policy, RE provides a diplomatic signalling mechanism and a weapon of deterrence. However, Beijing is quite clear about the advantages and disadvantages of RE in the industry value chain, which, within domestic and international constraints, de facto preclude extreme trade restrictions, such as an embargo.