Transcript (courtesy of the fantastic CadreScripts) further down the page. Image by Keya Zhou. Listen in the embedded player above!
This week I sat down with Gloria Xiong, Assistant Professor of Government at Colby College, and Jessica Chen Weiss, the David M. Lampton Professor of China Studies at Johns Hopkins SAIS, to discuss their new Foreign Affairs essay, “How China Found Its Most Potent Weapon: The Real History of Beijing’s Rare Earth Dominance.”
The story everyone tells is one of foresight — a master plan hatched by Deng Xiaoping and now coming to fruition. Gloria and Jessica argue the reality was far messier: reform-era export mania, environmental catastrophe, defiant local governments, scarcity anxiety, and a lesson in chokepoint weaponization that Beijing learned from Washington. Getting the story wrong, they argue, feeds an action-reaction spiral that neither side started and neither fully controls — and with the Busan truce expiring in November, the stakes could hardly be higher.
09:31 — “The Middle East has oil, China has rare earths”: what Deng Xiaoping actually said, and how a quote got recruited for a story he wasn’t telling
12:33 — Why the master plan narrative is so irresistible across the partisan spectrum in Washington
15:40 — The cheap and dirty origins: reform-era export mania, thousands of small mines, and rare earths sold “at the price of cabbage and dirt”
19:06 — The West as co-author of the chokepoint: offshoring the pollution, and the stockpile that was never built
21:53 — Beijing’s struggle to control its own industry: quotas, “crime rings,” and the partially failed 2002 consolidation
25:13 — September 2010: what really happened with the “embargo” against Japan, and why Beijing may have learned about it from Japanese customs
28:47 — Fans and fire hoses: how bottom-up nationalism can commit Beijing to coercive postures it didn’t choose
32:13 — The debate inside China after 2010: protectionists versus Hong Feng’s warning against using rare earths as “political chips”
35:44 — The 2015 WTO ruling: China complied — was it a rule-taker, or did it simply lack the tools to do anything else?
38:06 — Learning from Washington: Huawei, the Export Control Law, the China Rare Earth Group, and what distinguishes learning from planning
40:24 — The 2022–2024 ledger: what’s the evidence for an action-reaction spiral beyond the timeline?
44:25 — April 2025: coercion or bureaucratic pileup? Thirty licensing officials and a 74% collapse in magnet exports
47:46 — October 2025: the extraterritorial rule that mirrored the Foreign Direct Product Rule, and the Busan truce
52:32 — The countdown to November: hawks in both capitals, “mutually assured disruption,” and Xi’s coming state visit
55:29 — The limits of leverage on both sides: yttrium, Japan’s diversification, and China’s own resource insecurity
58:32 — From crime rings to two national champions: has the Wild West been tamed, and are central-local relations “fractured”?
01:02:21 — Prescriptions: positive reciprocity, licensing Chinese technology, and managing interdependence rather than escaping it
01:05:51 — Everyone else: Myanmar, Congo, Australia, and how Beijing thinks about third countries that don’t want to choose
Paying It Forward
Gloria name-checked Wendy Leutert of Indiana University, who works on the reform and global expansion of China’s state-owned enterprises and, with Isaac Kardon, on Chinese investment in global ports; Ning Leng of Georgetown University, author of the award-winning Politicizing Business: How Firms Are Made to Serve the Party State in China; and Ketian Zhang, who has written extensively on Chinese coercion and maritime disputes.
Jessica first acknowledged the scholars whose research the essay drew on but couldn’t cite in Foreign Affairs: Cory Combs of Trivium China, Arthur Kroeber, Henry Farrell, Duleep Singh, and Julie Klinger. She also flagged Jack Zhang, who runs the Trade War Lab at the University of Kansas, and Kyle Jaros and Sara Newland, who are writing a book on subnational economic statecraft — work that has shaped her thinking on disaggregating what the United States wants, not just what China wants.
Recommendations
Gloria: Healing the Heart of Democracy by Parker Palmer — a book she first read in a college writing seminar and returned to as she heads back into the classroom.
Jessica: The Scientist and the Spy by Mara Hvistendahl, which she uses to close her SAIS seminar on Chinese foreign policy as a reminder about proportionality; and Ann Patchett’s new novel Whistler.
Kaiser: Wallace Stegner’s Angle of Repose, the 1972 Pulitzer winner — a novel about mining camps in the American West and one of the most fully realized characters in American fiction.
Also mentioned: Jessica’s recent interview with Daniel Kurtz-Phelan on The Foreign Affairs Interview podcast, and her interview in The Monitor, the newsletter of the Carter Center’s U.S.-China Perception Monitor.
Transcript
Kaiser Kuo: Welcome to the Sinica Podcast, a discussion of current affairs in China. In this program, we look at books, ideas, new research, intellectual currents, and cultural trends that can help us better understand what’s happening in China’s politics, foreign relations, economics, and society. Join me each week for in-depth conversations that shed more light and bring less heat to how we think and talk about China.
I’m Kaiser Kuo coming to you this week from my home in Beijing.
Listeners, please support my work by becoming a paid subscriber at sinicapodcast.com. Yes, there are a lot of Substacks out there, and yes, they do start to add up, but this is a very worthwhile subscription. In addition to Sinica, you get great content from wonderful partners of mine like Trivium and the China Global South Project. And of course, Jay Carter’s wonderful This Week in China’s History. So please do subscribe so I can continue to bring you these conversations and lots more.
When Sinica started back in 2010, it was still possible for someone to participate meaningfully in the discourse on China, on the U.S.-China relationship, equipped with not much more than, you know, a decent grasp of the contours of modern Chinese history, a sense of the geography, a familiarity with the major party leaders and their portfolios, a working knowledge of Chinese political thought and the current slogans, you know, for good measure, a couple of good internet memes to add color and levity. The ability to scan a Xinhua readout and read a little bit between the lines and maybe a baijiu tolerance that would be sufficient to survive a provincial banquet with your dignity, mostly intact.
But man, things have changed these days; to weigh in with any expectation that you’ll be taken seriously, it feels like you have to know all of that and a great deal more. At a minimum, it seems like, you have to have your arms around AI, the entire stack, semi-conductors. You need to know what makes EUV lithography so damn hard — why it takes blasting molten droplets of tin with a laser like 50,000 times a second in order to make light of just the right wavelengths. And you got to have mirrors polished so smoothly that if you scaled one up to the size of Germany, there would be no bump taller than a millimeter.
You need you know, the energy system in China, you have to love lots of stats on the energy mix on solar, of course, and wind, ultra-high voltage transmission, all these things sort of at the ready. You need a grasp of trade flows, the difference between current account and capital account, why a bilateral trade deficit isn’t necessarily the scorecard that people think it is.
You need commodities, you need supply chain knowledge, you need military hardware knowledge, and of course, rare earths. And this last one, rare earths, has come to matter enormously over the past year and a half. They’ve turned out to be the Trump card, as it were, in Beijing’s hand. The one that actually made Washington fold, if I’m mixing bridge and poker metaphors now, but after the liberation day tariffs in April of 2025, China put seven rare earths and the permanent magnets made from them under export licensing; magnet exports to the world cratered. And within a couple of months, the Trump administration was walking back its own restrictions to get the flow resumed.
Then in October came the escalation that really got everyone’s attention. China was responding to the entity list of the affiliate rule, the expansion of the list, asserting the right to license any product anywhere in the world containing even a trace of Chinese rare earths or made with Chinese processing technology.
That was, of course, followed up by the truce at Busan in Korea that suspended this for a year, a year that, if you are counting, is nearly up in November. For those who need the primer, the rare earths are 17 metallic elements, the 15 lanthanides, that double row that sits like an island off the south coast of the periodic table, and like the periodic table’s Hainan dao plus their chemical cousins, scandium and yttrium.
The one thing people seem to know now, they didn’t know then, but they actually do know that they are not rare, that what’s actually rare is finding them in concentrations that are worth mining and then separating them from one another, which is really chemically very fiddly and environmentally really filthy. They go into, again, the permanent magnets that spin the motors in EVs and wind turbines and hard drives, the phosphors in your screen that you’re looking at as you’re reading this or listening to this, into catalysts, lasers, glass polishing, and into F-35s, into precision-guided munitions, into jet engines.
It’s a really small industry, actually, in terms of its sheer size, but with a mighty, mighty footprint. And China, as a lot of people now know, does roughly 85% of the world’s processing of rare earth elements. Some of you will remember that I did a show on this topic back in February of 2021 with the geographer, Julie Klinger, who’s the author of Rare Earth Frontiers, still a very worthwhile book to read.
Julie talked about how rare earths first broke into the broader public consciousness in the United States on the back of a couple of things. Of course, there was this incident between China and Japan in 2010, which we will get into a little bit in this conversation. And the movie, of all things, Avatar, which, as you will recall, was a story about a galactic struggle to control a rare earth-like substance called, with James Cameron’s characteristic subtlety, “unobtanium.”
The story most people tell about how China came to dominate rare earths is a story of foresight, of a master plan hatched decades ago and now coming to fruition. But my guests today have written a piece that argues that the story gets a lot wrong and that getting it wrong has real consequences for how the U.S. and China are managing what they call an action-reaction spiral that neither side actually started and neither really fully controls.
Their new essay in Foreign Affairs traces how China’s rare earth dominance actually came about through a messy and decades-long tangle of development imperatives, local government defiance, environmental catastrophes, real problems, scarcity anxiety, and only quite recently a lesson in geoeconomic chokepoint weaponization that was actually learned from Washington itself.
Gloria Xiong is the lead author. She’s an Assistant Professor of Government at Colby College, and she is a scholar of Chinese political economy and foreign economic policy, someone who does the thing this field needs more of, which is actually reading the Chinese language policy documents, the industry commentary, and the internal debates rather than just reasoning backward from outcomes.
She was also one of co-author Jessica Chen Weiss’s PhD students, which I gather makes this a very satisfying collaboration for both of them. Jessica, most of you already know, she is the David M. Lampton Professor of China Studies at the Johns Hopkins School of Advanced International Studies, a chair named from Mike Lampton, who was on the show himself not so very long ago.
She is a non-resident senior fellow at the Asia Society Policy Institute’s Center for China Analysis. And from August 2021 to July 2022, she served as a senior advisor on the Secretary of State’s policy planning staff under the Biden administration. And she has, since leaving government, been one of the most prominent and courageous voices arguing for a U.S.-China policy oriented around stability rather than unconditional competition. She’s been on Sinica many, many times. I also had the great pleasure of having dinner with both of them not very long ago in Beijing — Jessica’s hubby and kids.
One of them, or both of them, might show up in BBC style during the course of this interview. It’s Labor Day, so they’re at home. And also Gloria’s mom. I don’t think Gloria’s mom’s going to show up on screen here, but it was actually one of my very favorite restaurants here in Beijing. They didn’t tell me then that this piece was in the works. As usual, I recommend, if you haven’t already read it, that you hit pause and head over to Foreign Affairs to give it a read before we go on.
The piece is called How China Found Its Most Potent Weapon: The Real History of Beijing’s Rare Earth Dominance. But even if you haven’t, you are sure to get a lot out of this conversation. So, Gloria, Jessica, great to see you both. Welcome, Gloria, and welcome back, Jessica, to Sinica.
Gloria Xiong: Great to be here, Kaiser. As a longtime listener myself, very honored to be here for the first time.
Kaiser: Well, it’s wonderful to have you, and it was a terrific piece. I hope that I got the division of labor between the two of you correctly so that I ask you each the right questions. But don’t feel obliged to answer if you want to pass to the other. In the interest of an even division of the number of questions, I might have gotten some of these wrong. But look, Gloria, let us start with you. And let’s start where your piece starts, really, with this Deng Xiaoping quote — “The Middle East has oil. China has rare earths.”
He said that back in 1992. It’s been recited like scripture over, you know, especially over the past year, always with the same kind of implied gloss that Deng Xiaoping was announcing a coercive intent, a Chinese OPEC in the wings, right? You go back, though, and you guys put the quote in context, the immediate aftermath of the first Gulf War, after the Iraqi invasion of Kuwait, and Deng Xiaolan remarked that we haven’t paid enough attention to how to use this treasure.
So, what was Deng actually saying back in 92, and what does it tell us about how a quote gets recruited, gets used 30 years later, gets spun into a story that its speaker never actually was telling?
Gloria: I’m glad you asked about this quote, because an intriguing finding early on in our research is that according to Deng’s Nianpu, he made this comment in 1991 when inspecting Shanghai Volkswagen, saying that we haven’t conducted extensive research yet, haven’t paid enough attention as to how to use this treasure. My reading of this is that China knew rare earths were strategically valuable, which is why Deng said we must protect rare earths resources.
But they hadn’t really figured out whether or how to use them on the geopolitical stage. And I would highlight this. So, this quote, the very catchy quotes, “Middle East has oil, China has rare earths,” it’s not just everywhere in English-language reports and analysis. Chinese media often cited this and saying that Deng said it in 1992 as well. I think, I mean, it’s catchy because it points to the analogy of different kinds of choke points in the global economy.
In many ways, this quote became a microchasm of the broader debate that we have over China’s intention. And uncertainty around this indicate how one interpreted foreign policy from leaders’ statements or from behavior and policy, right? And I would argue that placing too much emphasis on what leaders say in this case makes it very easy to gloss away what’s actually happening in China’s rare earth industry in the decades following the statement.
Kaiser: Right, right, right. Excellent. And yeah, it’s usually the case that things are a lot more complicated. Jessica, you’ve spent years now pushing back, and I think quite heroically, on what you’ve called threat inflation, what I also call threat inflation, this tendency in Washington to read Chinese behavior as more coordinated, as more intentional and really more malevolent than the evidence actually supports. The master plan story about rare earth seems like a textbook case of this.
The House Committee, you got them saying Xi Jinping is actualizing Deng’s vision. Miles Yu calling it a deliberate decades-long strategy. What is it about this story that makes it so irresistible across the partisan spectrum? Is there something specific to critical minerals like, you know, their tangibility or maybe their mysteriousness, or the OPEC analogy, or maybe American PTSD years and years, 50 years on, over the Arab oil embargo from 1973? What is it that makes this master plan reading so hard to dislodge?
Jessica Chen Weiss: Well, first of all, Kaiser, it’s great to be here with you as always. I think the answer to this question, maybe speculating, I think maybe comes from two different reasons. One is that it was so unexpected. This is not something that the United States has been paying attention to or monitoring for a long time, even though, as we note in the article, there were warnings dating to 2010, that this was an unhealthy and potentially exploitable dependency.
I think the other is that China indeed has tried to secure a kind of market position for many years. But for the reasons that we document here, first, it had difficulty doing so. And that, second, that securing a more commanding position in the market is still not the same as trying to weaponize it effectively against others. And so, I think that a lot of these different objectives have been blurred together. And that, as Gloria pointed out, a lot of this effort to establish a more commanding position in the industry was in part an effort to avoid developing the opposite kind of dependency that China could quickly run out of these, this belief in the scarcity of these elements.
And China really didn’t want to become dependent on them, importing them much as it is for oil and gas. And so there can be, beneath these outcomes, because they do have this nearly unassailable position in the global market, 85% of processing dominance. So that’s real. And it has been a very effective chokehold used to fight off the Trump administration when it escalated wildly with its tariffs and export restrictions.
Kaiser: Yeah, yeah.
Jessica: And that, I think, adds up to how did we get here, and then, as you point out, there’s a lot of quick tendency to rush for, well, this was a plot all along.
Kaiser: Right. The 100-year marathon stuff where all that stuff became so de rigueur now in D.C. Gloria, though, let’s go back to the ‘80s. there’s a kind of irony in the account that you present. The actual technological breakthrough, the invention of this much cheaper method to separate rare earth elements coincided with this boom globally in demand for semiconductors. So, you see semiconductor demand just absolutely explode. The state’s overriding priority isn’t actually controlling the resource at all. It’s actually accumulating foreign exchange.
So, Beijing tolerates this kind of cheap and dirty approach, small scale mining operations. They’re quite destructive. They’re barely regulated at all. The output is shipped right off to Japan, to the United States, to Europe. So, should we understand China’s eventual dominance in rare earths as basically a byproduct of the export-at-any-cost mentality of the reform era? And when does anyone in Beijing actually start to notice that they’ve built something that is strategically consequential?
Gloria: So, well, as early as 1990, China has already declared rare earths as protected and strategic minerals. So, what we try to highlight in our piece is that despite this designation, Beijing’s strategic priorities in this sector have evolved gradually over time. It was, as you mentioned, regarded as a highly profitable sector at the time. Local and private enterprises rushed into the market in the ‘80s and ‘90s. So, the industry was at time fragmented, with thousands of small mines.
So, yeah, I agree with you, Kaiser, that it can be seen as this product of the reform era’s priorities. And also set against a global backdrop where neoliberalism was at its height, right? So, United States and Europe were actually very happy with offshoring extraction and processing to China. It’s cheaper, and pollution happened elsewhere. Then after the turn of the century, various problems in the industry became too salient to ignore for China, such as overproduction and domestic price wars from competing with each other on exports.
And this leads many Chinese experts to complain about China’s weak export pricing
