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China’s Grand Strategy to Exploit United States’ “Soft Underbelly” Goes Beyond Rare Earths

Much is being made of China’s recent threats to cut off Rare Earth exports to the United States, and the issue has – finally – helped bring the issue of mineral resource policy reform to the forefront. 

However, as Ian Easton, research fellow at the Project 2049 Institute and author of The Chinese Invasion Threat, writes in a new piece for The National Interest, “[t]he game is far bigger and the stakes higher than even many national-security experts seem to realize.” 

Easton argues:

“Beijing’s monopolization of the global rare earths industry gives it far more than a card to play in an escalating trade war. (…)

In the minds of Chinese strategists, this issue is ultimately about which nation, China or America, wins the central struggle of the twenty-first century, the race for world leadership. Obviously, they intend to win and to win big.”

He references official Chinese propaganda which underscores the Chinese Communist Party’s (CCP) position that REEs are “‘strategic resources’ for the ‘six new technology groups’ that Beijing sees as engines of China’s future strength,” and points to a 2015 publication by the Chinese military to underscore that China has “long viewed rare earths as a domain of strategic competition.

In fact, as ARPN’s principal Dan McGroarty pointed out as early as 2010, Chinese high regard for REEs and their potential dates back as far as almost 30 years ago, when former Prime Minister Deng Xiaoping reportedly said:
“There is oil in the Middle East. There are rare earths in China. We must take full advantage of this resource.” 
The 2015 Chinese military publication Easton cites darkly stated:  “Now the struggle between nations for these strategic resources is becoming increasingly fierce. So we must . . . strengthen our protection and control over these strategic mining resources.”
In his article, which is well-worth a read in its entirety, Easton outlines how “China’s authoritarian leaders have successfully executed a series of centralized plans to lock up the global rare earths market.”

Easton argues that is has been a combination of China’s ability to leverage “predatory economic policies” that exploit the openness of the international system, and a “great wall of protectionism” that has helped the country gain the upper hand on the Rare Earths front. 

The results, as followers of ARPN well know, have been “jaw-dropping,” – a near-total supply monopoly, and, as a fresh look at recent patent filings shows, an increasing monopoly on the know-how and processing methodologies. As James Kennedy, president of a St. Louis, Missouri-based consultancy found, China had filed for 25,911 patents on all the rare earth elements, as of October 2018, which is “far ahead of 9,810 by the US, 13,920 by Japan and 7,280 by the European Union since 1950 when the first US filing was made.” 

Easton argues that China is ready to leverage the same basic strategy it has successfully implemented in the REE field “across all the drivers of future military, technological, and economic growth, from pharmaceuticals to aviation and artificial intelligence to 5G communications.”

Easton’s bottomline should be a wake up call for U.S. policy makers:

“With minerals, China has found a soft underbelly to exploit. (…)

It is imperative for the continued security and prosperity of the United States that Washington wakes up to China’s strategic successes (and its own policy shortcomings) and begins to act accordingly.

So far, little has been done to ensure America is able to supply its own rare earth mineral needs. This leaves the nation, and especially the military, in a precarious situation. The Chinese government views the United States as an enemy and has demonstrated that it will go to great lengths to undermine American national-security interests. So, too, should American leaders be willing to take all necessary measures to break free of Beijing’s iron grip. Prioritizing American rare earths mining and encouraging domestic investment, production, and stockpiling is the place to start.”