China Turns The Screw And Continues To Severely Degrade US Military Capabilities

Welcome everyone.

Ever since we started this channel, one

of the more important items we've

discussed on numerous occasions is

China's dominating control over rare

earths. So much so that it even spurred

President Trump to even seek to go as

far as seize Greenland in order to try

to even the odds. But despite all the

bloiating rhetoric from the US on how

everything is fine and the issue is not

as debilitating as some analysts have

led on, a new and very interesting story

has emerged that validates nearly

everything we have said could come to

pass. And that story or event is what

we're going to dive into today.

Yeah, absolutely. But it's first first

worth reiterating

that China of course put sanctions on

the United States in terms of their

procurement of rare earth imports.

And yes, people will always say rare

earths are not rare. All right, that's

true. But China has a very strong hand

in terms of rare earth supply chains

because it accounts for about 90% of

global rare earth uh refining capacity

and about 95%

of permanent magnet production.

That gives Beijing an enormous leverage

over all the downstream industries

and rare earth elements and magnets are

essential in components for the United

States because well that's what we're

speaking about in precisiong guided

missiles in fighter aircraft radar

systems satellite communications

and also even electric motors which will

be used in for example aerospace base

applications

and it's definitely the case that

certain materials such as uh there are

what are called samarium cobalt magnets

are increasing being very difficult for

the United States companies to procure

and they're especially important for

things like high temperature defense

applications

with US businesses actually admitting

that for them some critical minerals

from China are nearly unobtainable now

under current restrictions.

Now obviously we have to temper this a

little bit with the with the of course

no one has all the evidence about US

military operations, US deployments,

combat readiness and what the lack of

access to rare earths is in a degrading

capacity in this regard. But it's

absolutely clear that this is impacting

supply chain resilience, production

times for US defense systems, for

procurement costs, inventory management,

and obviously any stockpiling

requirements.

And it's very clear that China is

targeting specific US companies. It's

imposing export licensing requirements.

I mean, and of course, there is an

attempt to downplay the significance of

this as though well, it's not a big

problem, but it is exposing the United

States to short, medium, long-term

vulnerability

because the United States is effectively

dependent on China for a whole raft of

rare earth processed materials.

And if you look back in recent years

since the the start of 2020,

China accounts for probably 75% of US

imports of rare earth compounds and

metals.

And obviously for the United States to

attempt to build alternative supply

chain, bearing in mind it needs to be

refined, is going to take many, many

years. not something, you know, you can

just flip a light switch and say, "Oh,

you know, we've dealt with this

problem." Now, China has obviously in

recent years targeted US companies in

terms of an export control list, which

means they've prohibited exports of

Chinese dual items, meaning something

that will be utilized for civilian and

military applications. and that's

affected a whole raft of defense and

technology companies. But China's also

barred nearly 50 US companies from

Chinese government procurement

and that includes major defense

contractors like Loheed, Raian, etc.,

etc.

I mean, so you can get an an

understanding that the China has really

taken the the the US to task over this

and made it very abundantly clear that

they were going to put were going to

throttle the US's military capability to

produce anything. Now I'll give way to

kind of then we'll get into the

specifics of certain developments but I

think it's very important that people

understand the background to this and

why it is a big problem for the United

States. It's not something that uh you

can trivialize and sweep under the

carpet and imagine it's not an issue.

>> Yeah. And I one of the things I want to

emphasize here is the rare earths are

really the the uh restrictions on rare

earths and especially and I want to put

absolute emphasis on this processed rare

earths as you pointed out uh rare earths

you can find them just off your

shoreline. Uh many different types

they're not that rare. some are and

China has a uh has a large uh control

over those specific ones that are used

for uh silicon uh for you know

electronics and magnets and and these

type of things and this is where it's

going to come into play here in just a

moment but I think the one thing you

have to take a look at is how has the US

been responding well the US can't uh

force China to do anything um they first

tried tried to do the tit fortat

sanction game and China just went higher

and and more than the US did. So Trump

had to back down. Then like I mentioned

in the intro

uh Trump started thinking about seizing

and conquering uh

other sovereign uh locations like

Greenland especially and going to Africa

or going to the to Southeast Asia etc.

and seizing control over uh these type

of facilities to get rare earths. Canada

uh Canada has been fighting back, but

that's another place where they can try

to get this. But in the end, the other

thing that's important is it's going to

take them at least a decade to be able

to build the facilities to be able to

process these rare earths. It's a very

toxic, it's a very uh long process to be

able to do this. and most US industries

and their regulatory bodies don't allow

them to go ahead and put in these type

of facilities.

So with that being said, we're starting

to see

uh cracks in the uh entire industrial

base and primarily in the military. So

much so that uh the Trump administration

also came out with this uh convoluted

statement that they're going to start

telling automobile uh industries to

start making military product uh

products and and the like. And it's this

military uh armaments that has really

fallen through the cracks which leads us

to what we're going to talk about now.

Yeah, it's worth kind of reiterating

that China's also targeting US companies

who want to establish domestic rare

earth mining and processing

capabilities.

I mean, and this comes in response when

the Pentagon made this decision to add

all these dozens of Chinese companies

and that relates to technology and

electric vehicles to a list of companies

they said has links to the Chinese

military. So every time the US thinks

they're going to retaliate, China comes

out and turns the screw even more. Now,

what's interesting in this regard is

there's reports that the US Marine Corps

had to accept six new F35B

fighters without noting their primary

radar systems installed. Can you imagine

being in receipt of a stealth fighter

without a radar system? I mean it

beggars belief and why has this

happened? Because there was delays in

the delivery of of the obviously the

APG85

radar. Now people can come draw their

own conclusions. The logic of this is

that they don't have the components to

obviously manufacture that radar. you

would logically think that relates to a

lack of access to processed

rare earth that would be needed to be

included

in in this APG85 radar. Now, of course,

obviously, if you're going to build be

these aircraft without that, the

question should be

why would anyone accept an aircraft

without radars? I mean, why are you

going to deliver aircraft rather than

halt production and wait for the radars?

Well, for me, the there's two main

reasons. Partly, it's just optics and

perception that it isn't a problem. And

yes, the jets can be used for basic

pilot training and flight operations,

but the one thing they can't be used for

is any combat missions. Well, that's

debatable anyway. combat training or any

full operational employment as as a

frontline fighter. So, it's like

cosmetically saying, "Well, we've taken

delivery of them." Oh, so it's not

really a problem. But I mean, what

exactly do you want an F-35 for? You

spend all that money to do some basic

pilot training? Absolutely not. But

again is indicative and a clear example

of what happens when you don't have

access to rare earth. Now obviously

there's ongoing problems as we know with

regards to the F-35 anyway. I mean and

yes these new radar systems do require

additional functionality.

Well if you haven't got the capability

to install them then the qu then that

raises a whole set of different

questions. But if you look back to um a

US government accountability office

report, it actually found that only a

quarter or 25% of F-35 were actually

even mission capable in 2025. Now of

course there is disputes about that and

saying well that's not actually the

case. It's a lot higher. It's like 50%.

Now on that basis that's one very clear

example that China's rare earth

restrictions

uh have created supply chain

disruptions. They have increased

significant strategic risks for the US

military-industrial complex. I mean okay

there's going to be people who will

argue to the contrary that that's got

nothing to do with this.

I don't I think it's pretty obvious that

there is a link to a to restrictions on

processed Chinese rare earths.

>> Indeed. And you know, just to expand

upon this, I know I'm slightly going off

of the rare earth thing, but I want to

go ahead and since we're talking about

the emission capability of something

like the F-35, uh go into greater

examples. Uh the US is going full boore

into trying to build this AI program and

that's going to require a massive amount

of rare earths because it's going to

take uh nuclear, it's going to have to

expand the uh the grid. It's going to

have to expand a lot of different

functionality just to be able to put

these in in uh in into play. And the

other thing when you take a look at it

is uh most of the uh technology with the

United States they are far behind. I ran

across this uh recently where the F-35

is a gen 5 aircraft and right now the US

is estimated to be 3 to four years

behind China on development of sixth

generation fighters and if they don't

have the rare earth to be able to do

radars for their gen 5 right now they

are not going to be able to do anything

to keep up with the Joneses when it

comes to Gen 6. uh fighters or a a Star

Wars program that uh Trump wants to put

into play or any of these things where

we're starting to see fall through the

cracks. Uh go back just a few years

before uh Elon Musk and and SpaceX were

providing rocketry to put things into

orbit. The United States was relying

upon Russian uh uh rockets to be able to

do just basic things. So it's something

that the rare earths are an important

key part because they can't build

anything without them in the technology

sector. But it also is indicative of the

fact that the United States is falling

so far behind almost a decade behind in

many different areas that the rare

earths are almost the least problem that

they have.

even though it's a huge problem and you

know it's worth reiterating the point

that because there's been disruptions

due to Chinese restrictions on rare

earth and permanent magnets to supply

chains that you're going to get

production bottlenecks, delivery delays,

etc. and production stoppages. But

here's a a very good example.

Specifically,

the Chinese exports of itrium to the

United States declined over an 8th month

period from over 330 tons to around 15

tons because these control mechanisms

were put in place. Now, why is it

important? Well, have a guess what?

Surprise, surprise. It's used in radar

components, sensors,

aerospace applications. So, could that

be linked to what we've just discussed

about radar systems and F-35s? It's a

possibility. It's not definitive, but

you get the idea of just one example of

the problems that creates. And

obviously, this is putting huge pressure

on the United States's defense

industrial capacity.

I mean, and and and they're trying to

plug holes and it's not that easy to do

it and particularly not that easy in a

compressed time frame. Again, we're back

to this point. It takes years. It could

take a decade. Who knows? And of course,

Chinese restrictions is also contributed

to huge price increases for rare earth

materials outside China. There's reports

that prices have increased by as much as

400%.

So therefore, if you've got far higher

costs for buying raw materials or raw

components, that is going to massively

increase costs for defense

manufacturers.

And it also complicates long-term

procurement planning for weapon systems

that depend on these materials. So while

some people will like to downplay this

and say it's not significant, it is

hugely significant. It also undoubtedly

is

figured in the US's

capability to be able to support Ukraine

in the Ukraine war. They can sit there

and go, "We're not doing it." And

pretend to be all pious and look, we're

doing the right thing. But it could be

they're doing the right thing because

they've got no choice but to do the

right thing. The other thing is has it

impacted the US's capability to continue

with the war in Iran? Okay, there's a

whole bunch of other factors in this,

but it's part of the whole broad

perspective of what happens

uh with China and and what that's

demonstrated is China didn't have to

fire a single shot to cause mayhem for

for US military uh industrial complex

across all for all the reasons we've

just highlighted. And this is go ties in

with what we recently discussed about

how modern warfare has changed.

China is in a position to cause mayhem

for the United States. And I, you know,

I think what we've discussed today

eloquently highlights that fact.

>> Indeed. Absolutely.

>> So I guess where do we how do we

summarize this? Well, China's rare earth

export restrictions, it's uh magnet

restriction is definitely massively

impacting the US military readiness. It

prevents military operations. They've

exposed major vulnerabilities in US

defense supply chains by restricting

these critical uh minerals. They create

procurement bottlenecks. They've raised

costs. They've massively slowed future

production of advanced military systems.

And the US has got no uh resolution of

this anytime soon. this could still

easily be a problem in five years and

arguably even longer. And this is

extremely important in blunting the US's

capability to then say to places like

Europe, well, you need to buy our

military industrial hardware. And

they're going, well, okay, when are we

getting it? Well, I don't know when

you're getting it. Maybe 5 years, maybe

10 years. what you want us to pay for

stuff we're not having for years when

you know this is not going to fly and

therefore these countries going to start

looking at their own alternatives and

therefore that could have long-term

implications for the US's

military-industrial complex and that is

a huge story in of itself and with that

we end today's podcast thank you very

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say goodbye.