China’s dominance over rare-earth elements, used in everything from cars to vacuum cleaners, has become a cause for concern. The country controls 90% of the world’s supply of refined rare earths, which are crucial for producing strong magnets. However, after China blocked exports in April, many producers and politicians panicked.
Automakers in India, Japan, and the US halted production, with one car industry boss describing the situation as “panic mode.” European Commission head Ursula von der Leyen criticized China’s dominance and called it a form of blackmail. But experts say that the West can break China’s grip on these vital minerals by adopting new strategies.
To counter this threat, companies like McKinsey must adapt their approaches. They may need to rethink their methods and be more humble in their approach. The tech industry is also exploring alternative solutions, such as investing in AI-powered consulting services.
One solution that has been overlooked is the expansion of buy-now-pay-later options for lenders. If used responsibly, these services could provide vital financing options for businesses affected by China’s actions. As the US eases chip-export controls at a critical juncture, it’s essential to maintain the current restrictions on sales to China.
Source: https://www.economist.com/leaders/2025/08/13/xi-jinpings-weaponisation-of-rare-earth-elements-will-ultimately-backfire