#50 China and Trade in Critical Raw Materials (CRMs): Understanding the means of exchange, control, and power amid heightened geopolitical tension
Critical raw materials (CRMs) — from rare earths to gallium, germanium, tungsten or antimony — have become central instruments of power politics in an era of intensifying great-power competition. As the energy transition, digital transformation and modern defense industries drive demand for an ever-widening range of mineral resources, China's dominant position across mining, processing and trade has turned resource security into a defining question of sovereignty for Europe and its allies. Since 2023, Beijing has progressively deployed export controls and other tools to leverage this dominance, placing the survival of key European industries — automotive, energy, health, aerospace and defense — increasingly at risk. This paper argues that too little policy attention has been paid to the underlying mechanics of CRM markets themselves, a gap that has allowed severe market concentration to take hold and threatens to entrench further dependency. It sets out a framework for understanding how CRM trade functions, examines the sources and levers of Chinese power in this space, draws lessons from Japan's experience of supply chain diversification, and closes with concrete recommendations for the European Union and the Netherlands.
This new CKN report establishes a framework for understanding the key principles that determine trade in critical mineral markets. It explores China’s role within these markets and analyses how Beijing’s recent exports controls are reorganizing CRM trade. The report also discusses efforts to develop critical mineral value chains outside China, with a particular focus on Japan. It concludes with key lessons and policy recommendations for Europe and the Netherlands.
In short:
- Critical Raw Materials (CRMs) are now a lever of geopolitical power — and a matter of sovereignty for Europe.
- China is a primary target and user of export controls.
- Responding to China is a complex and comprehensive task for European governments.
- There are no easy diplomatic solutions, choices demand tough trade-offs and have costly consequences.
China Knowledge Network
The Dutch China Knowledge Network (CKN) is a network established to involve China experts and disseminate knowledge within the government of the Netherlands and beyond.Our key task is to connect various angles of research and events to better understand China’s motives, policies and vision to develop more effective policies and better advise social partners. The secretariat of the knowledge network has been assigned to think tank Clingendael together with LeidenAsiaCentre. They will function primarily as ‘knowledge brokers’, matching the supply and demand of knowledge.
