There’s a good primer at RealClearDefense by David Uren on how China came to dominate global rare earths production:
As the Cultural Revolution subsided and the administration of Deng Xiaoping began focusing on China’s economic development, exploiting natural resources and adding value to them became a priority. In 1986, Deng approved a national high-tech research and development plan to help China ‘to gain a foothold in the world arena; to strive to achieve breakthroughs in key technical fields that concern the national economic lifeline and national security; and to achieve “leap-frog†development in key high-tech fields in which China enjoys relative advantages or should take strategic positions’.
Although I think that reversing the present situation is a vital national security priority, it’s unclear to me how we can manage that. Producing and refining rare earths is environmentally damaging. I’m not sure how we could go about selling the notion that we should be subsidizing domestic rare earths production but that’s what we’d need to do to avoid being dependent on a strategic rival that isn’t hesitant about using their dominance as a weapon for materials we need to maintain both our military and domestic economy.
We are hamstrung by environmentalists who do not see Chinese authoritarianism as a threat. Examples are the Keystone and Keystone XL oil pipelines environmentalists say should not be built. They’re right. Gasoline refineries should be built it North Dakota, near the source. But the same people resist that in the courts as well. This sclerotic entropy will continue until the need is imminent, and personally urgent.
Cali fires in the same vein, need electricity, so power lines. Want forests, so laws prohibit what should probably be a quarter mile clear cut each side of the lines. Fires result, PG&E is bankrupt, so even if legal, who pays for the clear cut?
This shit will continue until disaster, then we’ll see if enough Americans want freedom more than comfort. We are at war with China whether we like it or not.
Some see the Empire’s stranglehold on rare earths as a problem. I see it as an opportunity. If Xi jacks the price up too much, or restricts supply, R & D gets even more money than they’ve already been receiving to find alternatives.
Tars:
You may have a good point, if the regime misallocates funds as they are prone to do, technology may leave them
Stockpiling buffalo hides as Cotten gins up.
Some production processes are simply icky. You haven’t lived until you’ve stood on top of a coke oven. Horrible. Unfortunately, if you want to make steel you have to have coke ovens.
As a nation we have become a bunch of unrealistic candy asses. That comes with costs.
Rare earths are only one area in which we are behind. China spends much more on R&D and basic research than we do. They educate many more engineers and scientists, quite a few at our best STEM graduate programs. Chinese scientists (especially if we count those in our graduate schools) publish as many refereed papers as we do. Their industrial sector is larger than ours, much more diverse, and more modern. They are really big on robotic assembly lines. They have a manned space program, we don’t. They have stealth aircraft, long range heavy bombers, ICBM’S, sub launched BM’s, a large and growing nuclear arsenal.
They have Russia as an ally, and the two of them are stitching together a Eurasian economic giant
Most importantly, they have a highly competent government and a true nation state with very high quality people. Their government is populated by nationalists and patriots. They are authoritarians, which means they can direct their people and economy along productive lines. They are succeeding wildly.
We, on the other hand, led by buffoons and actual traitors who are deliberately deindustrializing our economy and wrecking our military, are on a downward spiral to irrelevance.
“I’m not sure how we could go about selling the notion that we should be subsidizing domestic rare earths production ”
Since China can produce them cheaper we would need to subsidize, but we generally oppose government supporting businesses. My suggestion is to figure out which state would be best for the mining then move the first primary in the nation to that state. It’s worked for ethanol.
Query- If the Chinese are subsidizing everything they do, if they have built up the capacity to build every car the world needs and have the capacity to do the same in many other industries, whence comes the ability and financial wherewithal to not only build all of that but sustain it?
Steve
whence comes the ability and financial wherewithal to not only build all of that but sustain it?
From the barrel of the gun — as a Mao used to say.
What is the market price of Chinese labor — no one knows — since no one can strike.
What is the market price of Chinese land for factories is — no one knows — since the government determines the price, and one cannot appeal.
What is the market price for Chinese interest rates — no one knows –since the central bank is not independent of the government.
If you mis-price the cost of labor, land, money — wildly uneconomic things become feasible (in the short term).
In the long term, there is payback (hell) for this mispricing (a la the Soviet Union). But the long term is measured in 50+ years. The Soviet Union looked pretty good until 1970. It can be extended even longer if you can export some of the mispricing to your trading partners (something the Chinese have learned from the Soviets).
Until the Molotov-von Ribbentrop Pact the Soviet Union was the marvel of the world (and for some long after). The Soviets’ means were nearly identical to the Chinese—moving relatively unproductive labor resources from agriculture to manufacturing. The Chinese, unlike the Soviets, have been able to do that without reducing agricultural production. At least they did for a while.
If your plan is for one year, plant rice. If your plan is for ten years, plant trees. If your plan is for one hundred years, teach people.
What sort of plan is the CCP making? I think they realize that for them there is only tomorrow.
“But the long term is measured in 50+ years. The Soviet Union looked pretty good until 1970.”
The USSR never even came close to the build up China has seen. And, China has done this while lifting huge numbers out of poverty.
“you can export some of the mispricing to your trading partners ”
Mostly by subsidizing lower prices. The government, or some entity, is absorbing huge losses. China must be sitting on huge amounts of unknown debt, or they really are that much more efficient than everyone else.
Steve
steve:
Since China’s currency is not convertible and its banking system is notoriously opaque, there is no way to tell. It has been widely suggested that China’s debt is much, much higher than they acknowledge.
Dave- Yes, so it shouldn’t be sustainable. They cant subsidize all of their industries. If we didnt help them so much they should fold.
Steve
Monetary sovereigns can incur enormous debts for a considerable period, creating tremendous market distortions all along the way.
As of 2019 the U. S. debt to GDP ratio is around 100% but Japan’s is over 200%. We don’t know what China’s D/GDP ratio is but officially it’s about 55%, similar to Germany’s.
Weather’s been getting colder, today on the way to my sisters house, to comfort and her after her husband’s death sunset Friday in a farm accident, I stopped by Orchilins for winter lined jacket. When I finally found one that fit, $79.00, I checked the label, China. I’ve never been an activist, but prisoner slave labor is too much for me, put it down and walked away.
Condolences, GrayShambler. People don’t realize how dangerous an occupation farming is.
Thank’s,Dave. This is the Bible Belt, He’s on his way to heaven, all the bills were paid, and tons of insurance, double indemnity. About his faith, his wife and children share it, and it’s not a veneer.
My sister will heal, and I envy their faith.