by Ivan Lizan
[REGNUM] We learn about many Western monopolies that have formed and become so commonplace that they are no longer noticeable only when they collapse. We will certainly learn more in the near future, thanks to Chinese companies that are quietly but systematically capturing world markets.
But it is worth starting with the already formed Chinese monopoly. We are talking about the extraction of rare (RM) and rare earth metals (REM). RM includes 17 minerals, the rare group includes another 60 elements, including lithium and cobalt.
The peculiarity of rare earth metals is not so much their small reserves, but their low concentration in the earth's crust, uneven occurrence across countries, and their tendency to form strong compounds with other metals and minerals. As a result, to extract rare earth metals, it is necessary to shovel thousands of tons of rock, spending a lot of energy and chemicals to extract them as pure metals and other compounds. Therefore, the extraction of rare earth metals turns into big problems for the environment, and the club of producing countries has never been large.
In 1986, the United States was the leading producer of rare earths, more than twice as much as the USSR, and China was in third place. With the collapse of the USSR, the Soviet rare earth industry also disappeared. At the same time, China, with the support of the government, began to actively increase the volume of REE production: it was becoming increasingly difficult for American miners to compete with cheap Chinese rare earths, and increased pressure from environmentalists finally finished off the Mountain Pass mine.
Thus, by the mid-2000s, the global rare earth market was under the control of China, accounting for over half of production.
Until 2023, China's monopoly in the REE sphere was a burden for governments of other countries only when they tried to get rid of it - export control allowed the Chinese government not only to control the price of REEs, but also, if necessary, to bankrupt Chinese competitors by dumping on the market. However, in 2023, China began to impose export restrictions.
First, the American military-industrial complex giant, Lockheed Martin, and its subsidiary Raytheon, responsible for missile production, fell under sanctions. Then Beijing introduced licensing for the export of germanium and gallium under the pretext of protecting national security. And this became a huge problem for the American military-industrial complex: it is cut off from part of the REE, and its total consumption of these minerals does not allow for profitable extraction of the necessary minerals in the United States under market conditions.
At the same time, other companies continue to receive supplies from China and do not need expensive rare earth metals from Mountain Pass.
STEEL
Already in 2024, it was not only gallium and germanium from China that became a problem. Chinese steel became a headache for many countries. China smelts 1 billion tons a year, more than the rest of the world combined. For comparison: Russia smelts 75-77 million tons a year, Ukraine before the start of the SVO - 20-22 million.
For decades, steel remained in China, where it was consumed by construction sites. The Chinese government was aware of the dependence of its own metallurgy on the construction industry, as well as the negative impact of metallurgy on the already problematic ecology, so it periodically introduced bans on the construction of new metallurgical plants. Naturally, the plants tried to export surplus metal.
From 2025 onwards, China's steel demand is expected to decline by 1% per year, equivalent to 10 million tonnes. The "excess" metal has already found its way onto the world market: in the first six months of 2024, China's steel exports grew by 24%, reaching 53.4 million tonnes. The country now exports around 100 million tonnes of steel per year.
Russia is not affected by the influx of Chinese steel: its import in 2024 is at the level of last year. In addition, Russian metallurgists have a general agreement to refuse to supply metal to suppliers of cheap imports. But for the European Union, this is a problem: in August, the European Commission began anti-dumping investigations into the import of hot-rolled sheet metal from Egypt, India, Japan and Vietnam, through which Chinese metallurgical plants can bypass European restrictions.
If in 2023 there were three anti-dumping investigations against metal from China worldwide, then by the beginning of July 2024 their number increased to ten. At the same time, the already mentioned Ukraine is not able to compete on the European market with Russian steel, and even less with Chinese steel.
RENEWABLE ENERGY
China has achieved no less resounding successes in mechanical engineering. IA Regnum has already written about the reasons for the popularity of Chinese cars. But China also has something to brag about in power engineering, and in its most fashionable part - "green" energy.
In August 2024, Norwegian consultancy Rystad Energy reported that China's installed solar and wind power capacity exceeded that of coal-fired power plants for the first time. From 2020 to 2023, China commissioned 100 GW of renewable energy, and in 2023, 293 GW of new "green" capacity was commissioned.
The presence of its own RM and REE, together with the focus on the development of renewable energy, has allowed Beijing to make a giant technological breakthrough in solar and wind energy. The already low cost of producing photovoltaic cells in China has decreased by 42% this year. Now the specific cost of solar modules in China is 15 cents per 1 watt, which is significantly lower than the production figures for India (22 cents), Europe (30 cents) and the USA (40 cents).
Therefore, it is not surprising that China controls 80% of the world market. And it is not a matter of dumping or subsidies - it is the effect of scale and a powerful raw material base.
A similar story is with wind turbines. By the end of 2023, China took first place in the world in registering patents in wind energy. As in the case of solar power plants, the effect of scale, domestic reserves of rare earth metals and cheap steel are at play.
In 2023, of the 116 GW of new wind power capacity globally, projects in China accounted for 65%, with most of the generators being manufactured locally. China now also accounts for 40% of the world’s total installed wind capacity, making it the world’s largest market, surpassing the US and Europe. As a result, Chinese wind farms are three times cheaper per MW than those in the US and EU, so they are barred by prohibitive tariffs.
COMPUTER HARDWARE AND TECHNOLOGY
In the field of high technology, China's leadership has long been undisputed, and it is no longer fought so much by high R&D spending as by sanctions.
A striking example of their inefficiency is the Huawei corporation, against which the United States first introduced restrictions back in 2019. Following six years of being under American sanctions, Huawei managed, firstly, to triumphantly return to the Chinese smartphone market, causing a drop in Apple sales; secondly, to bring its Ascend 910B AI chips to the market, forcing the American Nvidia to sell its products on the Chinese market at a discount of 10-15%; thirdly, to take and hold first place in the Chinese cloud computing market for seven years in a row; fourthly, to ensure global leadership in the wearable electronics market.
All this allowed the corporation to earn record profits — with a growth of 34.3% — in the first half of 2024 in the amount of $7.7 billion. In addition, Huawei released the world's first smartphone that folds in three in September.
But Huawei's breakthroughs are not the end of Western problems: Chinese companies have put down roots in the production of semiconductors and other components for electronics. The creation of YMTC in 2016 resulted in a collapse in prices for SSD drives by 2022 - China not only learned to produce next-generation memory, but also began to produce it in gigantic volumes, changing the alignment of the global market. At the same time, the company's inclusion on the US sanctions list could not stop YMTC: last year, it mastered the mass production of 232-layer memory chips with a record storage capacity.
The situation on the global display market is no better for Chinese competitors. For many years, South Korea dominated the LCD and OLED display market — OLED screens were a competitive advantage for smartphones from Samsung. But then the star of China's BOE Technology Group began to rise. First, it captured the LCD panel market, bringing its market share to 26.5% by the end of 2023, and now it is storming the global OLED market. The Chinese company currently controls 12% of the global market, but BOE is building new factories and actively investing in development. Meanwhile, the United States is discussing the need to include it in the sanctions list — under the pretext, of course, of protecting national security.
VIDEO GAMES
Chinese companies have also reached an area where the West's position previously seemed unshakable. In the summer of 2024, the Chinese studio Game Science released the computer action game Black Myth: Wukong, which immediately set several records in the global video game industry. Sales of the game on the Steam platform exceeded 21 million copies, bringing Game Science $1 billion with development costs of about $70 million. The game also broke the record for the number of simultaneous players - 2.1 million people played it.
Black Myth: WuKong had every chance to become the game of the year in the prestigious Golden Joystick Awards 2024 rating, but it did not work out for various reasons, including those far from fair voting.
Apparently, Chinese successes are very stressful for American studios. In particular, the publisher of the legendary Call of Duty series of games, Activision-Blizzard, for which Microsoft recently paid 70 billion dollars. After all, if sanctions can still be imposed on Game Science, then standing behind every gamer and making sure that they do not launch Chinese games will definitely not work.
And in general, sanctions are sanctions, but, as practice shows, it has not yet been possible to stop China.
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