5. Strategic autonomy

The EU is not dependent on China for rare earths alone. It is Europe’s main supplier for 10 out of 30 critical raw materials. (1) The EU is also heavily reliant on China for products containing these materials, such as solar cells, permanent magnets, batteries, and digital components and devices. This gives China leverage over the EU, not only on its energy and digital transitions but also its broader policies.

China’s quest for economic dominance is intertwined with its political aspiration to become a leading global power. The nature of the Chinese regime  autocratic with tech-totalitarian and imperial leanings  makes it a systemic rival to the EU. (2) A Europe that wants to protect and promote democracy, human rights, the rule of law, and multilateralism should not allow its path towards strategic autonomy to be undermined by Beijing's 'divide and conquer' politics.

Chinese infrastructure investments in countries such as Hungary and Greece have already provided Beijing with a foothold within the EU, enabling it to block European condemnation of its human rights violations. (3) The purchase of Chinese digital equipment for 5G networks, which comes with the risk of commercial and political espionage, has also divided the EU. In the energy sector, Europe’s dependence on China creates a political headache now that Chinese manufacturers of polysilicon metal for solar cells are heavily suspected of using forced labourers from the oppressed Uighur minority. (4) Spurred on by the European Parliament, the European Commission has announced a proposal to ban products made with forced labour. (5) Since the EU buys most of its solar cells and panels from China, such an import ban might well slow down Europe’s energy transition. While it is essential for the EU and China to cooperate in the fight against climate change, the EU must avoid trade-offs between climate protection and human rights.

Recycling

Expert network on rare earths

As early as 2010, Green Member of the European Parliament Reinhard Bütikofer took action to counter the risks of Europe’s dependence on rare earths from China. That year, a drastic reduction in Chinese export quotas for rare earths sent prices outside China skyrocketing. In response, Bütikofer initiated the European Rare Earths Competency Network (ERECON), which brought together over a hundred European experts on rare earths. (6) They came up with a set of recommendations on research, extraction, processing, recycling, and substitution, including a call to start mining rare earths in Europe. (7)
However
, once the supply crunch had come to an end, and following the decision by manufacturers of permanent magnets to move their operations to China, the rare earths issue slid off the European Commission’s agenda.

Push back scarcity

The need to preserve its values and to gain strategic autonomy obliges the EU to diversify its sourcing of scarce metals and related products  including from within its borders. Improved recycling of scarce metals would represent a first step towards domestic supply chains.

Ecodesign requirements to boost the circular use of metals are all the more valuable because EU standards are followed by producers worldwide. (8) The same goes for due diligence requirements: even Chinese firms will have to clean up their act if they want to serve the European market. Thus, EU standards can help push back metals scarcity worldwide.

However, recycled metals can only gradually replace virgin metals. (9) To diversify its supply, the EU also needs to strengthen its ties with supplier countries outside China. Not by forcing them into free market economics, as in the case of Indonesia, but by marrying trade with sustainable development. More generally, the EU needs to step up its development cooperation and, via the European Investment Bank, provide an alternative to the Chinese loans that have caught several poorer countries in a debt trap, with Beijing ultimately gaining control over their natural resources.

Competition

Assisting developing countries in adding value to their metal ores can loosen China’s grip on supply chains and cut transport emissions. If the DRC were to refine more of its cobalt, it would not need to go through China before reaching Europe and other end users. But value addition in developing countries may eventually spell competition with European industries for the same resources. Indonesia, for instance, has already signed deals for the construction of battery and electric vehicle plants on its territory. (10) Will Jakarta remain willing to share its refined nickel and cobalt with the rest of the world once it has the capacity to transform them into end products?

If the Global South were to overcome its resource curse and produce its own cleantech, this would be a milestone on the road towards the SDGs. But it also raises the question of whether Europe’s industry can rely on imported metals. Should we not look under our own feet instead?

Footnotes

Further viewing

Financial Times, 'Why China's control of rare earths matters' Afspelen op YouTube
Logo Green European Foundation

Green European Foundation (GEF)

This project is organised by the Green European Foundation with the support of Wetenschappelijk Bureau GroenLinks (NL), Fundacja Strefa Zieleni (PL), Transición Verde (ES), Etopia (BE), Institut Aktivního Občanství (CZ), the Green Economics Institute (UK) and Visio (FI), and with the financial support of the European Parliament to the Green European Foundation.

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