Exposing the wrong way to handle China’s threat

Editors at National Review Online question the Trump administration’s approach toward China.

President Trump understands the seriousness of the threat that China poses to the U.S. and understands, too, how America’s unhealthy dependence on China across wide swaths of the economy compounds that threat. But he has not properly thought through how to address it.

Declaring a trade “war” against most of the world at the same time as taking on Beijing reveals reckless overconfidence, misplaced priorities, or both. This war will hurt the U.S. economy more than it helps it. That’s a win for China. It has antagonized allies and potential allies. Confronted with “liberation day,” some waverers may calculate that China is the more reliable partner or, even, that they have no choice other than to kowtow.

The recent announcement of a somewhat hazy deal suggests that the administration also failed to consider who, to borrow a fashionable metaphor, holds which cards. One of China’s strongest cards is the position that it holds in the rare-earth market.

Rare earths are metals that have certain properties that render them indispensable in various electronic and high-tech applications, from electric vehicle engines to the motors that power a drone and the sensors that help them “see.” Notwithstanding their name, they are not particularly rare. Finding them in a form sufficiently concentrated (they are typically found within other minerals, rather than in “standalone” form) to make them worth extracting is more difficult. China is thought to have nearly 40 percent of the world’s usable reserves and to account for 60–70 percent of rare-earth production, and perhaps 90 percent of rare-earth processing (the percentage varies with the metal). …

… There is no quick fix. The Chinese regime will not release enough rare earths to permit any significant stockpiles to be built up over here. For now, all that can be done is to look for alternative sources of supply — even if the immediate pickings are both slim and expensive. Looking further ahead, the current squeeze will encourage businesses to look for alternative technologies. This should include a major effort to make it less difficult to recycle rare earths.

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