Made in China: Rare earth elements, US deindustrialization

Posted in Made in China, Stumble and Fail at 8:05 am by George Smith

About a month ago, Steve Aftergood’s Secrecy blog published one of the many Congressional Research Reports, a taxpayer funded analysis withheld from the public.

It’s title: Rare Earth Elements: The Global Supply Chain.

And it is here.

It discussed China’s virtual monopoly on the rare earth elements “needed in many industrial and national security applications, from flat panel displays to jet fighter engines.”

And over the past few weeks, news agencies in the US have published stories, usually in the backpages, on China cutting Japan off from rare earth shipments in a trade war, political retaliation for the latter country’s seizing of a Chinese ship.

Faced with separation from rare earth shipments, Japan promptly caved in.

The Congressional Research Service issues studies on policy issues when they’re requested by various members of that body, usually in advance of hearings or possible proposed legislation. The CRS reports do not reveal the identity of the requestors.

Today in the New York Times, Paul Krugman addresses China’s monopoly on the rare earth elements. It is just another example of American corporate business and political shortsightedness.

Or the attitude that rare earth mining had to be disposed of in the US because it was too damn dirty and there was so much more money to be made by shipping it to China and turning to financial instruments made by Wall Street.

Writes Krugman:

I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation …

You really have to wonder why nobody raised an alarm while this was happening, if only on national security grounds. But policy makers simply stood by as the U.S. rare earth industry shut down. In at least one case, in 2003 — a time when, if you believed the Bush administration, considerations of national security governed every aspect of U.S. policy — the Chinese literally packed up all the equipment in a U.S. production facility and shipped it to China.

The news here, as usual in the US of Fail, is all bad.

“The United States was once self-reliant in domestically produced [rare earth elements], but over the past 15 years has become 100% reliant on imports, primarily from China …” states the Congressional Research Report at Secrecy blog.

Notably, manufacturing of all the domestic consumer products requiring the rare earths was also shipped to China.

Military hardware and weapons production that requires them — stealth bombers and smart bombs … was not.

But you knew that without me having to tell you.


  1. Major Variola said,

    October 18, 2010 at 11:26 am

    “willing to wage economic warfare on the slightest provocation”

    Why build an export economy if you can’t use it? Why build dependancies if you can’t milk them?

    PS: the obligatory “rare earths aren’t rare” just hard to separate.

  2. Dick Destiny said,

    October 18, 2010 at 11:35 am

    I think there’s a realization they can have their cake and eat it too. Chalk it up to American weakness.

    However, one of the main drivers has been corporate America. The company’s that bet on deindustrialization would be — short term — crippled by a trade war. So China has a really strong lobby in the US.