{"id":490318,"date":"2025-10-11T06:31:16","date_gmt":"2025-10-11T06:31:16","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/490318\/"},"modified":"2025-10-11T06:31:16","modified_gmt":"2025-10-11T06:31:16","slug":"the-clash-of-the-pandas","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/490318\/","title":{"rendered":"The clash of the pandas"},"content":{"rendered":"

Although giant pandas are the national animal of China, they could also serve as a fitting symbol for Europe: both are experiencing plummeting birth rates, environmental devastation, and \u2013 in fairly recent memory \u2013 territorial incursions<\/a> by a larger, Russian bear.<\/p>\n

Just as our furry mammalian cousins\u2019 survival hinges on their access to bamboo, the Chinese and European economies are also crucially dependent on a highly specific resource: the 17 chemically similar, silvery-grey metals known as \u201crare earths\u201d.<\/p>\n

As many analysts<\/a> have pointed out, the term is a misnomer: rare earths are not, in fact, especially rare, but can be found in numerous parts of the world, including Australia, Russia, and the US. (Strictly speaking, they aren\u2019t even earths<\/a> either.)<\/p>\n

Unfortunately, Chinese strategic planning, European NIMBYism (rare earth extraction and processing are highly polluting), and historical accident have led Beijing to dominate<\/a> the world\u2019s current supply of the metals, accounting for about 70% of global\u00a0mining and 90% of total refining.<\/p>\n

In a stable, peaceful world, the world\u2019s overwhelming reliance on a single country for strategically critical elements wouldn\u2019t be problematic. But in a world of heightened geopolitical tensions \u2013 namely, our actual one \u2013 such vulnerabilities will almost inevitably be weaponised.<\/p>\n

Recent events show just how ruthless this weaponisation can be.<\/p>\n

Although Beijing first strengthened its grip on the supply of rare earths following a territorial dispute with Japan<\/a> in 2010, its chokehold tightened significantly this April, when US President Donald Trump<\/a> launched a trade war on literally the entire world \u2013 with China the principal target<\/a>.<\/p>\n

Beijing\u2019s imposition of sweeping retaliatory export controls immediately sparked pandemonium (or should that be panda-monium?) not just in America, but in Europe<\/a>, where carmakers and other key industries have been forced to delay or shutter production.<\/p>\n

Washington quickly backed down. Beijing, however, did not. Indeed, European firms have continued<\/a> to struggle to obtain export licences for the elements, which are used to manufacture not just cars but also crucial military hardware, such as fighter jets and radars.<\/p>\n

On Thursday, China further constricted<\/a> its bureaucratic claws\u2019 clasp \u2013 in a move that could, potentially, throttle the entire global rare earth supply chain.<\/p>\n

Under the new export system, products containing trace amounts of Chinese elements will require a licence before they can be shipped outside the country. Exports of the metals for overseas military use, meanwhile, will \u201cin principle<\/a>\u201d be banned.<\/p>\n

Responding to the announcement, the European Commission expressed \u201cconcern<\/a>\u201d and stressed, somewhat pathetically, that it \u201cexpects China to act as a reliable partner and to ensure stable, predictable access to critical raw materials.\u201d<\/p>\n

EU firms, meanwhile, could barely hide their frustration \u2013 and their fear.<\/p>\n

The controls \u201cadd further complexity to the global supply chains of rare earth elements\u201d, said Jens Eskelund, president of the EU Chamber of Commerce in China, adding that the announcement is \u201clikely to increase trade tensions further\u201d between Brussels and Beijing.<\/p>\n

Analysts agreed. \u201cIt\u2019s a serious escalation in the weaponisation of critical materials,\u201d said Arthur Leichthammer, a policy fellow for geoeconomics at the Jacques Delors Centre in Berlin.<\/p>\n

Although \u201cmuch remains uncertain\u201d about the new measures \u2013 including how strictly and consistently they will be enforced \u2013 they nevertheless \u201chave the potential to seriously hit both Europe\u2019s civilian and defence industrial production,\u201d he added.<\/p>\n

Bear necessities<\/strong><\/p>\n

But why did China announce this new scheme now?<\/p>\n

One potential answer also points to events on Tuesday, when the Commission<\/a>, which oversees EU trade policy, proposed doubling the bloc\u2019s tariffs on steel to 50% \u2013 a move that was widely regarded as targeting China<\/a>, the world\u2019s top producer of the alloy.<\/p>\n

Could correlation be causation? Are Beijing\u2019s export controls, in fact, retaliation against Brussels\u2019 attempt to, as the Financial Times<\/a> put it, \u201cweld itself to the US\u201d, which introduced similarly steep<\/a> steel levies earlier this year?<\/p>\n

Experts warn that the answer is not so black and white.<\/p>\n

Indeed, they argue that the measures are more likely aimed at Washington \u2013 and, in particular, are intended to strengthen Beijing\u2019s hand ahead of a potential meeting<\/a> between Trump and Chinese President Xi Jinping in South Korea later this month. (Trump on Friday suggested<\/a> that he may not attend the meeting because of the restrictions.)<\/p>\n

\u201cThis measure seems quite drastic,\u201d said Niclas Poitiers, a research fellow at Bruegel, a Brussels-based think-tank. \u201cChina might not expect to enact it in full; rather, it\u2019s creating leverage for negotiations.\u201d<\/p>\n

The fact that the controls closely mirror America\u2019s \u201cextraterritorial\u201d export restrictions<\/a> on advanced US-made semiconductors to China further bolsters the case that Washington is the prime target, analysts said.<\/p>\n

\u201cIt\u2019s maybe not a complete coincidence that this came just two days after the steel tariffs, but this would have been planned long ago,\u201d said Leichthammer. \u201cThe reality for us Europeans is that we\u2019re not the priority here anymore.\u201d<\/p>\n

Why the (bamboo) stick?<\/strong><\/p>\n

This, however, still leaves some crucial questions unanswered.<\/p>\n

First, why did China opt for the stick, rather than the carrot, ahead of the meeting with Trump?<\/p>\n

The answer, it seems, is that China believes \u2013 probably correctly \u2013 that Trump ultimately only respects strength. Indeed, by standing up to Uncle Sam in April, China has been the only country to secure actual concessions from the US since Trump\u2019s return to the White House \u2013 and has won the respect of much of the Global South<\/a> in the process.<\/p>\n

Poitiers also noted that Beijing has already partly offered the US a \u201ccarrot\u201d by agreeing to the sale of the Chinese social media app TikTok<\/a> to US firms.<\/p>\n

\u201cThe carrot \u2013 the gesture of goodwill \u2013 was the TikTok deal,\u201d he said. \u201cAnd now they\u2019re showing that they also have a big stick. They\u2019re basically saying: \u2018If we work together, there are opportunities here. But if we don\u2019t, then we can make life difficult.\u2019\u201d<\/p>\n

These considerations naturally suggest lessons for Brussels\u2019 own attitude toward Washington \u2013 one which even senior EU officials admit<\/a> is entirely submissive.<\/p>\n

But they also raise another, worrying question: Is the EU\u2019s relationship with both Washington and Beijing increasingly being dominated, or even determined, by the US-China rivalry?<\/p>\n

Analysts are uncertain. \u201cWe are at an interregnum: a moment where power is up for grabs, and the rules of the game are in play,\u201d said Poitiers.<\/p>\n

Whatever happens, let\u2019s cross our claws that, at the end of this period, Europe\u2019s economy avoids turning into a \u201cmuseum<\/a>\u201d, as many EU leaders have long warned \u2013 and, perhaps even more importantly, that we steer clear of the fate of the world\u2019s pandas: and end up trapped in a zoo.<\/p>\n

Economy News Roundup<\/strong><\/p>\n

Brussels \u2018concerned\u2019 by new Chinese rare earth restrictions. <\/strong>The European Commission said it was unsettled by China\u2019s sweeping new export controls on strategically critical rare earths on Thursday, as relations between Beijing and Brussels continue to deteriorate just days after the bloc announced<\/a> steep levies on Chinese steel imports. Read more.<\/a><\/p>\n

EU alignment with Washington on China a \u2018surprise\u2019, says new US ambassador<\/strong>. In an exclusive interview with Euractiv, Andrew Puzder said he thought he \u201cwould have to do more\u201d to persuade EU officials to regard Beijing as a strategic, political, and economic \u201cadversary\u201d. Read more.<\/a><\/p>\n

Union chief urges Brussels to protect workers\u2019 rights. <\/strong>The European Commission has repeatedly rebuffed unions\u2019 demands to drop the \u201cthreat\u201d of rolling back workers\u2019 protections in its push to slash red tape, the head of Europe\u2019s largest trade union organisation told Euractiv. Esther Lynch, general-secretary of the European Trade Union Confederation (ETUC), also said Brussels\u2019 \u20ac2 trillion budget proposal is also \u201ctoo small\u201d and could spell \u201cdisaster\u201d for European regions. Read more.<\/a><\/p>\n

EU must seize \u2018unique opportunity\u2019 to supplant US dollar dominance, says ECB president. <\/strong>The European Union must \u201cdo its homework\u201d and seize the unprecedented opportunity to strengthen the global role of the euro at the expense of the US dollar, Christine Lagarde told MEPs on Monday. Read more.<\/a><\/p>\n

EU has \u2018no final idea\u2019 on how to reconcile twin Ukraine loan schemes. <\/strong>The Commission is struggling to work out how to fund a planned \u20ac185 billion Ukraine reparation loan using frozen Russian assets while keeping a separate \u20ac45 billion G7 scheme on track, a senior EU official said on Monday. Read more.<\/a><\/p>\n

Brussels backs down from \u2018no deregulation\u2019 pledge. <\/strong>The European Commission refused to confirm on Monday that its previous commitment to \u201csimplify\u201d EU legislation without \u201cderegulating\u201d remains intact, after President Ursula von der Leyen emphasised the importance of \u201cderegulation\u201d to boost growth and private investment last week. Read more.<\/a><\/p>\n

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