Submitted by Thomas Kolbe
China is responding increasingly aggressively to mounting trade pressure from Washington. The practice of forcing even German companies to hand over trade secrets in exchange for rare earths exposes the Chinese leadership’s coercive stance. For Europeans, it is high time to align with the U.S.
For months, German firms with a need for rare earths have faced growing pressure from regulators in China: to maintain access to this critical group of raw materials, they are compelled by Chinese authorities to disclose sensitive operational and supply chain data—a form of technological tribute that creates long-term strategic dependencies and extracts know-how from German industry under Beijing’s state coercion.
Of course, this practice applies to companies from other EU states as well. Germans are by no means alone in being forced to surrender economic sovereignty.
Everything Is Exposed
According to an analysis by Bloomberg Law, the catalog demanded by Chinese authorities includes precise data and detailed information on internal production processes, customer lists, end uses, and supply chains. Everything potentially useful to Chinese competitors is laid bare.
In one case, German trader Magnosphere reported that Chinese authorities requested confidential data, including product and manufacturing details, before issuing export licenses.
Another example: European chemical and specialty materials group Solvay recently announced plans to expand its rare earth production capacity in La Rochelle, precisely because dependence on China is a threat.
In short, German companies face a choice: raw materials or sovereignty, with the risk of massive production disruptions if Beijing restricts exports. German automakers, in particular, are acutely aware of this issue—the conflict is escalating and will not vanish amid China’s economic and domestic political struggles.
China’s economy is caught in a deflationary spiral, unemployment is rising, and American pressure on the Chinese export model forces the political leadership to implement rapid course corrections.
It was foreseeable that the Communist Party would leverage every available geopolitical instrument in such a situation.
China Dominates the Market
The dispute over rare earths, now a strategic battleground in the geopolitical power struggle of major players, reveals their fundamental importance to the modern economy: they are the nervous system of industrial manufacturing. No neodymium, no aircraft production, no electric mobility, no artificial intelligence.
China has so far controlled up to 90% of global processing of this group of raw materials. About 60% of known deposits are located in Chinese territory.
The European Union remains largely powerless in this power play. Through subsidized recycling programs and its own partnership initiative, it seeks to secure access to rare earths worldwide. Yet here, as in trade policy vis-à-vis the U.S., it is equally ineffective. Today, the entire geopolitical focus is on the U.S.-China conflict. Europe is marginalized.
U.S. Sets Facts
U.S. President Donald Trump has begun dismantling the strategic dependency the U.S. faces, similar to the EU. By threatening Chinese exports to the U.S. worth $300 billion with additional 100% tariffs, he forced Beijing onto the defensive.
China had threatened to choke high-tech supply chains. Then came Trump’s 72-hour turnaround. While the EU scrapes its last reserves to sustain the lost Ukraine conflict and entangles itself in regulatory debates, Americans created facts.
A raw materials agreement was signed with Malaysia, Thailand inked a processing deal, and Australia committed billions to developing new mines. Mining rights in Cambodia were also secured.
Alternative Trade Formation
An alternative network of supply locations is emerging, with the potential to break China’s rare earth market dominance for the first time in 30 years. Trade flows are shifting at rapid speed: U.S.-China trade is shrinking sharply, with Chinese exports to the U.S. down about 27% this year, while ASEAN business booms. Washington is leveraging its massive domestic market—about a quarter of the global economy—as a geopolitical tool.
Trump’s message to partner states is clear: either play by our rules and gain access to the U.S. market on our terms, or face Beijing alone. Even if this requires your companies to hand over patents and trade secrets to secure measured supplies of scarce resources from China.
“Choose Your Fighter!” is now the Europeans’ stark reality.
EU Should Join Forces with the U.S.
The EU should urgently reconsider its stance toward Washington. On its own, energy-dependent and resource-poor Europe cannot free itself from China’s grip. Beijing’s leverage is enormous. Europeans currently watch passively as China turns its export engine into a dumping ground for shrinking U.S. trade and systematically crushes local companies with massive subsidies and state export guarantees.
Europe should align with Washington and accept American conditions for true free trade. This means finally abandoning typical European protectionism: the climate regulatory jungle, technocratic harmonization catalogs, and a dangerously aggressive censorship policy targeting U.S. tech companies.
In short: Europe must decide whether to remain a powerless regulatory advocate or challenge Chinese power alongside the U.S., playing by its rules rather than bowing helplessly.
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About the author: Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.
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