China Controls Rare Earth Supply But Lacks High-Value Patents

China controls approximately 70 percent of global rare earth mining and 90 percent of processing capacity, yet it lacks dominance in high-value intellectual property. According to a study reported by the South China Morning Post, the United States and Japan hold the majority of core patents for advanced rare earth functional materials, accounting for over 80 percent of such patents globally.

Japan maintains a technological lead in permanent magnets, while the United States leads in catalytic, luminescent, and polishing materials. The research identifies a gap in China's innovation system, noting that while the country produces a high volume of patents, few possess international commercial value. This deficiency is attributed to weak coordination between Chinese universities and the industrial sector.

Despite this technological lag, China utilizes its supply chain dominance as a tool of economic statecraft. The government exploits Western dependencies on these critical minerals to exert influence over defense systems and renewable energy technologies.