The electronics manufacturing industry has been one of the sectors that have experienced the most rapid growth in China. China has been a major source of the export of electronic gadgets and telecommunication equipment. The country has also developed itself as a major producer of defence systems and components, mainly for the domestic market. Rare earth elements are essential for the production of electronic devices and major defense systems, and as a result, China has heavily exploited its share of rare earth minerals, for use in domestic manufacturing as well as to transform itself as a major source of the mineral for global demands. Luckily for China, the majority of the world’s proven rare earth reserves are found in the country. As of 2017, known world reserves of rare-earth minerals amounted to some 120 million metric tons of contained REO. China has the largest fraction (37%), followed by Brazil and Vietnam (18% each), Russia (15%), and the remaining countries (12%). Chinese deposits accounted for about 80% of the rare earth minerals mined in the world in 2017 (105,000 tons of rare-earth oxide). The major deposit is located at Bayan Obo, Inner Mongolia (83%), while smaller deposits are mined in Shandong (8%) and Sichuan (3%) provinces. 

The rising demand for consumer durables around the globe and the subsequent rise in the demand for rare earth elements has given China similar prominence in the international community as middle eastern countries yield due to their petroleum reserves. China’s monopoly allowed it to raise prices by hundreds of percent for various rare-earth materials from 2009 to 2011 and also to impose export quotas on many of these products. However, China still desires to expand its hold on rare earth minerals well beyond its border because when it comes to power, the more the better.

In 2009, a Chinese state-owned company tried to acquire the largest rare earth mineral mining and processing company outside of Chine, Australia-based Lynus. The deal was blocked by the Australian government on grounds of national security.

In May 2019, Xi Jinping paid a well-publicized and highly symbolic visit to a rare earths mine in Jiangxi that was interpreted as highlighting the leverage his government has over Washington.