The US and China will hold high-level talks in Malaysia in the coming days, to pave the way for a smooth meeting between Trump and Xi next week. US trade representative Greer is already on his way to Kuala Lumpur while US Treasury secretary Bessent will be heading over soon just as well. Once there, they will be meeting up with China vice premier He Lifeng and the delegation from Beijing.
Interestingly enough, Trump is also coming to visit. At first, it seemed like this would’ve been the meeting spot for him and Xi on the sidelines of the ASEAN Summit. But with China sending out their vice premier instead, there were still question marks surrounding Trump’s attendance even though it was confirmed by Malaysia’s own prime minister.
But even with Xi’s absence, Trump is still feeling magnanimous enough to make the trip. So, what gives? This picture might be enough to tell you all you need to know:
The thing about rare earth compounds is not so much the source but rather the processing capabilities. It’s environmentally challenging and damaging in general, making it tough for many countries to have them. Australian company Lynas has been running operations in Malaysia, having set up the largest rare earth processing facility outside of China. And that’s the main draw in all of this.
Even if dwarfed by China, Malaysia still holds a ~13% share when the rest of the world ex China combined only holds a ~17% share of rare earth imports by the US. This does suggest that Trump might want to ensure this line of communication remains open as Beijing continues to threaten rare earth export controls in the trade war.
This means that as small as a country that Malaysia is, it does hold some form of leverage against the US in negotiating its position on trade and other matters. So, we’ll have to see if Trump will seek to bring this issue up to offer something back to Malaysia as part of his visit.
As a reminder, the US does not hold any exclusive rights to the rare earth compounds from Malaysia – which only allows for processed ones to be exported.
Things are pretty much coming full circle for Malaysia and Lynas in this regard. For those unaware, the result of having this rare earth processing plant in Malaysia is itself a byproduct of geopolitical tensions – but between China and Japan. In turn, that led to Japan expanding their horizons in seeking a partnership with Australia but setting up shop in Malaysia instead.
That serves as a reminder to the US that China’s tactics of halting rare earth exports is not something new, as Japan were the first ones to find that out.
This article was written by Justin Low at investinglive.com.