Global Supply Chain Restructuring under China-US Trade Friction - An Analysis Based on the Rare Earth Industry

DOI: https://doi.org/10.62517/jel.202514609

Author(s)

Xiaoyu Shi

Affiliation(s)

School of Business, Yancheng Normal University, Yancheng, Jiangsu, China

Abstract

In the context of escalating trade friction between China and the U.S. and intensified geopolitical competition, rare earths have become a key variable in the global supply chain restructuring. Rare earths face challenges due to China's dominant position in the upstream global rare earth sector and structural contradictions. The U.S., through policy and international alliances, is pushing the "decoupling from China" strategy, aiming to weaken China's influence in the rare earth field. This article, through a comparative analysis of Northern Rare Earth and MP Materials, uses qualitative analysis and case studies to reveal two approaches: the former consolidates its dominant position through "domestic demand-driven + technology upgrading + regional alliances" based on resource scale and smelting advantages; the latter creates a "U.mining-ally processing-local application" closed loop through policy subsidies and allied coordination. According to 2024 production data, Northern Rare Earth accounts for about 69% of global separation capacity, while MP Materials has achieved 100% rare earth separation capacity in the U.S. With the growth of emerging demands such as AI chips and new energy vehicles, the rare earth industry chain is shifting from "efficiency-oriented" to "security-oriented." Technological breakthroughs, regional alliances, and digital governance are becoming three pathways for restructuring. This article suggests strengthening heavy rare earth reserves, accelerating magnetic material technology upgrades, promoting green smelting, establishing multi-node trade networks, and enhancing rare earth diplomacy to address global supply chain restructuring challenges, drive industrial upgrades, and move towards becoming a "rare earth power."

Keywords

China-US Trade Friction; Rare Earths; Supply Chain Restructuring; Value Chain Security; Technological Breakthroughs

References

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