Core Viewpoint - G7's plan to impose a price cap on rare earths, similar to the previous measure against Russian oil, may backfire due to China's dominant position in the rare earth industry, which is significantly stronger than Russia's in oil [1][2]. Group 1: China's Dominance in Rare Earths - China produces over 60% of the world's rare earth minerals and accounts for more than 90% of the processing stages [2]. - China's smelting and separation technology is far superior, making it difficult for other countries to refine rare earths even if they have access to the raw materials [4]. - The West has experienced supply shortages due to China's previous export restrictions during trade tensions, highlighting the critical role of Chinese supply in high-end manufacturing [4]. Group 2: G7's Strategy and Implications - G7 believes that setting a price floor will help local rare earth companies in Australia and Canada become profitable and reduce reliance on China [7]. - G7's approach labels China's competitive pricing as "unfair," with leading Chinese company Northern Rare Earth's production cost below $30 per kilogram, compared to over $50 for Western counterparts [7]. - If China retaliates by tightening export controls, it could severely impact Western industries reliant on rare earths, such as electric vehicles and electronics [7]. Group 3: China's Response and Future Outlook - The Chinese government views export controls as necessary for national security and argues that unilateral price caps violate market principles [8]. - China is advancing in rare earth recycling and green smelting, positioning itself not only as a resource supplier but also as a leader in technology and standards [8]. - The increasing use of the renminbi in commodity transactions may lead to significant changes in global trade dynamics [8]. Group 4: Conclusion - G7's proposed rare earth price cap may ultimately harm their own interests rather than weaken China's position [9]. - A cooperative approach in competition is suggested as a more viable solution than policy-driven market distortions [9].