Risks from China's Raw Material Power for Austria

"Don't worry about China, it will all be fine!", said US President Donald Trump on Sunday. However, the facts show a different picture. Four days earlier, China had restricted the export of rare earths - those metals essential for the functioning of mobile phones, computers, and electric cars. The conflict over rare earths is not new. As early as 15 years ago, Beijing used these metals as a political pressure tool and stopped exports to Japan.

Rare Earths: China also controls processing

What has Europe done since then? Not enough, said Peter Klimek from the Supply Chain Intelligence Institute Austria (ASCII) to the APA. Although there has been a new EU law since 2024 called the "Critical Raw Materials Act" aimed at improving the supply of critical raw materials. But: According to experts, this law overlooks an important point - processing. Before rare earths can be used, they must first be processed. And here too, China has control. An example of a product from processing is permanent magnets. These are needed for e-cars, wind turbines, or robots. According to ASCII, Austria imported every second of these magnets from China in 2023.

Why China's raw material power is dangerous for Austria

If China stops exports, it would also have consequences for Austria - especially indirectly: Germany's industry is heavily dependent on these materials. According to a study by the consulting firm McKinsey, without Chinese supplies, four million jobs and 370 billion euros in value creation would be at risk there. This also affects Austria: Almost half of all Austrian car parts went to Germany in 2024, according to the Vienna Institute for International Economic Studies (wiiw). If less is produced in the neighboring country, there are also fewer orders for domestic companies.

What can be done against China's raw material power

For economist Harald Oberhofer from the Austrian Institute of Economic Research (WIFO), it is clear: Europe must significantly reduce its dependence on China. For example, by building its own processing facilities. Recycling rare earths from old devices also plays a crucial role. This strategy should be complemented, in his opinion, by partnerships with new supplier countries like Brazil.

(APA/Red)

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