So far, 2019 has not been kind to China. Trump just whacked them with another tariff hike, GDP growth has declined significantly in 2019, and now Huawei, one of their biggest companies, has been blacklisted by the U.S.
But even with all this going against them, they still have an advantage (economically at least) in one regard:
China controls 95% of the world’s “rare earths” – a category of 17 elements found within the earth’s crust. These elements, which contain a unique set of properties that can make products more durable and efficient, have become critical ingredients in most (if not all) modern technologies.
Batteries, lasers, lighting equipment, and most importantly, electronic devices all require rare earth minerals to function.
The Apple iPhone, for example, relies on them heavily. Four different components in the phone (the camera, speakers, receivers, and taptic engines) can’t function without rare earths, and as of right now, the only way to get them large-scale is through mining.
And guess who has the world’s biggest natural supply of them?
Other countries have rare earth mineral deposits as well, but they don’t even come close to China’s quantity or mining capabilities. Over the last 4 years, demand for rare earths have shot up 91.7% according to Adamas Intelligence, a research firm that tracks metals and minerals.
So even though Trump is putting the squeeze on China in every which way, the fact remains that America’s electronic device-producing companies need those 17 elements from the Far East to keep their businesses running.
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