Strategic Dilemmas Related to Critical Raw Materials as the Engine of Digital Transition – The Power Relations of Brussels and the Beijing Effect

Abstract

This study analyses digital policy, an important field for Hungary, as a member state holding the consecutive presidency of the Council of the European Union in the second half of 2024. The analysis draws particular attention to the imbalance in the global value chain of critical raw materials that represents a great challenge from the point of view of strategic sovereignty, but whose sustainability is essential for digital development. The study examines the major political tests of strength taking place along the Beijing–Brussels–Washington axis, comparing the Chinese dominance of raw material supply with the ever-growing European trends in raw material demand. In addition, the study examines EU legal acts and the Critical Raw Materials Strategy of the great powers using a case study methodology, by considering the question: What degree of exposure does the European Union have towards China in the procurement of critical raw materials, and what should the Union do in the future to strengthen its strategic sovereignty? The study concludes that 1. the development of digital technologies is highly dependent on critical raw materials; 2. the green and digital transition will drastically increase the demand for certain raw materials by 2050 at the European level; 3. the supply of many critical raw materials is highly concentrated, with 98% of Europe’s imports of rare earth elements coming from China, an excessive dependence on a quasi-monopoly country which makes Europe vulnerable. Finally, 4. to reduce the latter trend, it is important to strengthen strategic partnerships and to find alternative raw materials, by stimulating innovative research.