- China agrees to consider India's growing rare-earth material needs during Wang Yi's visit
- Wang Yi promised to address India's needs in fertilisers, rare earths, and tunnel-boring machines
- This marks a massive step in fixing a relationship that went sour after the Galwan crisis of 2019
China's in-principle decision to look at India's growing requirements for rare-earth materials marks a massive step in fixing a relationship that went sour after the Galwan crisis of 2019 in Eastern Ladakh when soldiers of both sides were engaged in fatal clashes, the first in decades.
Sources indicate that in meetings in New Delhi, China's visiting Foreign Minister Wang Yi has promised External Affairs Minister S Jaishankar that China will address India's requirements in fertilisers, rare earths and tunnel-boring machines. Wang Yi's visit comes weeks ahead of Prime Minister Modi's visit to Tianjin for the Shanghai Cooperation Organisation (SCO) summit, his first visit to China in seven years.
The assurance on rare-earths is particularly significant and comes at a time when the United States, which has long considered Beijing a strategic rival, appears to have entered into its own deal with Beijing to meet its industrial requirements. Last month, US President Donald Trump announced, "Our deal with China is done, subject to final approval with President Xi and me," he posted on Truth Social. "Full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities."
Since then, the United States has imposed a whopping 50 per cent tariffs on India, including 25 per cent for New Delhi's continued import of Russian oil, a priority to meet India's burgeoning energy requirements. Trade talks between Washington and New Delhi have all but broken down. China, which imports more Russian oil than India, has faced no such sanctions. Delhi has called the US actions "unfair, unjustified, and unreasonable."
While it's too early to say whether China's decision to agree to look into India's rare-earth requirements marks a beginning of a broader strategic re-think between New Delhi and Beijing, it is clear that Trump 2.0 has left the global order in a state of deep churn.
Beijing, for its part, wants to do business, both with New Delhi and with Washington. In a statement following his meetings in New Delhi yesterday, the Chinese government said, "unilateral bullying is rampant," a clear reference to Washington. "China and India should demonstrate a sense of global concern and responsibility as major countries, set an example for the vast majority of developing countries to unite and strengthen themselves, and contribute to promoting a multipolar world."
China dominates the global supply of rare earths and accounts for 60-70 per cent of global rare earth mining.
Rare earth minerals have unique physical and chemical properties which are key in reducing energy consumption, achieving miniaturisation while ensuring thermal stability.
India has identified 30 minerals which are critical for India's economic security.
In a report published last month, the State Bank of India says India has been spending 33 million dollars per year for the last four years to import rare earths and compounds. There are multiple applications in electronics, manufacturing, medical science, renewable energy and technology which are crucial for the Indian economy.
SBI Research: China's ban on Rare Earth and Permanent Magnets: Implications for India
While China has not imposed a complete ban on rare earth exports to India, there are strict export restrictions and a complex licensing system which require importers to obtain special permits. The process has significantly disrupted supply chains to Indian manufacturers. The SBI report says sectors in India impacted include "Transport Equipment, Basic Metals, Machinery, Construction and Electrical & Electronics."
