ZGXT(SZ:000831) Sou Hu Cai Jing·2025-07-23 05:10Core Viewpoint - The U.S. is facing a significant crisis in rare earth elements (REE), heavily reliant on China for military applications, which exposes strategic vulnerabilities and may lead to costly failures in its "decoupling" strategy from Chinese supply chains [1][3][10] Group 1: U.S. Military and Supply Chain Issues - The U.S. military's dependence on China for REE is critical, with 90% of military-grade REE sourced from China, leading to production halts in key defense projects like the Raytheon Tomahawk missile and Pratt & Whitney engine upgrades [1][3] - The Pentagon's strategic reserves are only sufficient for 9 months, highlighting the urgency of the situation [1] Group 2: Legislative and Corporate Responses - The U.S. Senate is attempting to advance the Critical Minerals Act, but major companies like General Motors and Tesla oppose it due to potential cost increases of $500 for electric vehicles if they sever ties with Chinese supply chains [1][3] - The U.S. government has invested hundreds of billions to reduce reliance on China, including a $4 billion acquisition of MP Materials shares and a $110 per kilogram long-term procurement contract [3] Group 3: China's Strategic Position - China has increased its REE exports to the U.S. significantly in June, but this was primarily due to the release of previously backlogged orders rather than a genuine increase in supply [5] - China's export strategy is selective, prioritizing long-term contracts and controlling high-purity REE exports critical for military applications [5][9] Group 4: Technological and Market Control - China is advancing its technological edge in REE extraction and processing, with estimates suggesting that the U.S. may need 10 to 20 years and trillions in investment to catch up [3][7] - China has also implemented stricter export controls on REE technologies, which could hinder U.S. capabilities in critical sectors [7][9] Group 5: Long-term Implications - The U.S. is at a crossroads, facing the dilemma of either paying high prices for Chinese REE or risking paralysis in its military and renewable energy sectors [9][10] - The competition for REE has evolved beyond a trade war, with China potentially monopolizing the secondary supply of REE by 2030, further complicating U.S. efforts to establish independence [10]