ZGXT(000831) Sou Hu Cai Jing·2025-06-08 11:03Core Viewpoint - The recent export control on rare earths by China has triggered significant global repercussions, highlighting the strategic importance of rare earths in the tech and military sectors, and escalating the ongoing competition between the US and China for technological supremacy [1][6][18] Group 1: Impact of China's Export Control - China's export control on seven categories of medium and heavy rare earths has led to a dramatic price increase, with international prices soaring by 210%, and specific prices like dysprosium oxide exceeding $850 per kilogram [6][12] - The US military-industrial complex is heavily reliant on Chinese rare earths, with the F-35 fighter jet requiring 417 kilograms of rare earths, and the US Department of Defense having stockpiled 3,000 tons of rare earth permanent magnets, which still may not suffice [5][6] Group 2: US Response and Strategy - In response to the export controls, the US has attempted to mitigate the impact by approving exemptions for rare earth mining and planning investments in rare earth mines in Brazil and Mongolia, but remains dependent on China for processing, which accounts for 90% of global refining capacity [7][8] - The US has also imposed significant tariffs on Chinese goods, citing issues like fentanyl, while simultaneously seeking to secure rare earth supplies, reflecting a contradictory approach [6][8] Group 3: Global Reactions and Economic Consequences - Major automotive companies, including Ford and General Motors, are facing severe operational challenges, with Ford resorting to layoffs and GM's stock price dropping by 12% due to supply chain disruptions caused by rare earth shortages [9][12] - The European Union has reacted by introducing the "Critical Raw Materials Act," and German automakers have united to challenge US policies, indicating rising tensions among allies [9][12] Group 4: China's Strategic Position - China's domestic demand for rare earths is increasing, particularly in the electric vehicle and wind power sectors, with a reported 15% year-on-year growth in consumption in Q1 2025, which helps offset losses from exports [12][18] - Chinese companies are transitioning from merely selling raw materials to offering technology, as evidenced by a 727% increase in net profit for Northern Rare Earth and a 40% growth in orders for Ningbo Yunsheng [12][18] Group 5: Future Outlook - The demand for rare earths is expected to surge with advancements in technology, such as Tesla's Optimus robot potentially requiring an additional 400,000 tons of rare earths if mass production is achieved [13][18] - China's control over rare earth processing patents and its established supply chain create significant barriers for foreign companies attempting to bypass Chinese resources, with Japan's efforts to develop "no-rare-earth magnets" failing [17][18]