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Rare Earths and Drones: China Is Squeezing the West
What was discussed
China's rare earths export restrictions
China has implemented a licensing system since last year requiring Western companies to complete detailed questionnaires and due diligence before purchasing rare earths, including commitments that materials won't be used for military production. This system has been steadily tightened, causing panic among Western buyers as reported by the Financial Times, with suspected larger impacts on military production companies.
F-35 radar production issues from gallium arsenide shortage
F-35 fighter jets have reportedly been flying with counterweights in their noses instead of radars due to production delays. The advanced radars depend on gallium arsenide, a metal almost entirely produced and exported by China, which is now restricting exports and causing a shortage that prevents radar set production.
US tungsten export restrictions and cascading material shortages
The US government is now restricting the export of used tungsten and other materials so they can be recycled within the domestic military industrial system, since China is the overwhelming supplier of tungsten, which is essential for missiles and rockets. This reflects a broader cascading effect of the sanctions and counter-sanctions dynamic on US military production, with potential future effects on high-end civilian goods as well.
Trump-Xi discussions on trade restrictions
Trump is expected to discuss these export restrictions with Xi Jinping when they meet, though similar discussions reportedly already occurred during their meetings in Korea and Beijing without resulting in policy changes from China. Despite these talks, China has continued tightening controls on rare earths and related components.
China's new licensing system for drone component exports
China has announced counter-sanctions against the United States by setting up a licensing system for drone component exports similar to the rare earths system, requiring detailed questionnaires and due diligence, including for exports through third parties. This follows Russian complaints for over a year about Chinese-made drone components being used in Ukraine's drone offensive against Russia via export through third parties to Europe, and the system is expected to extend to Europe within months.
Predicted impact on Ukraine's drone offensive
It is speculated that Ukraine's drone offensive, which has relied on stockpiled drones built up over many months using cheap Chinese components, will see production suddenly and dramatically decline, potentially from around 1,000 drones per night to 100-150. Europeans and Americans cannot produce drones at comparable costs using only their own materials and technology, meaning restricted access to Chinese components will cause costs to balloon and production to become unsustainable, similar to previous issues seen with artillery shell production.
Every episode of The Duran Podcast, briefed the morning after, with up to nine more shows in one daily email.
Free for 30 days. No card needed. $4.99 a month after.
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