The object of the Chinese game of “Go” is to outmaneuver your adversary by surrounding him until he has nowhere else to go. Once totally encircled, your rival is forced to surrender and you are victorious. It has become passé to claim that China has been playing “Go” while the United States has been playing checkers, but it is closer to the truth than we care to admit.
Since opening itself up to the West in the 1970s, China has been striving to insert itself into every aspect of the world’s economy. Once it integrated itself within this framework, Beijing worked assiduously to dominate the most strategic sectors. If the Chinese could not dominate these sectors, then they sought to become so important that refusing to do business with China would be financially detrimental.
China Corners Rare Earth Metals
China’s encirclement strategy continues today, even as the trade war rages between the two titans.
China has become so enmeshed in the global supply chain that, for years, they have managed to work themselves into an important position in the vital rare earth metals market. For the record, rare earth metals are essential for any and all modern pieces of technology. Everything from your iPad to a cruise missile requires rare earths to function.
Beijing has endeavored to have an outsized influence in this market not only for the sake of making money (although they do plenty of that) but also because Beijing knows such an outsized influence would complicate the ability of the rest of the world—specifically the United States and its allies—to have access to these important minerals.
There is some debate as to whether the Chinese could actually deprive the United States of the vital rare earths. In 2010, the Chinese attempted to restrict access to rare earths and the world market was able to correct for this flagrant abuse and keep trade going.
Rare earth metals get their name not because they are hard to find. Instead, they are called “rare” because they are hard to reach. China’s mercantilist trade policy is akin to staking out every waterhole in the desert—only rather than cutting off access to water (although, that’s not beyond them—just ask the Indians), the Chinese are doing it with rare earth metals.
Even if China cannot restrict American access to rare earths, the fact that 35 percent of global reserves (the most in the world) are in Chinese control, and that China produced 70 percent of total rare earths in 2018, and that 80 percent of rare earths consumed by the United States in 2018 came from China, means the threat to American high-tech is real. Still, the United States is working with its partners to overcome this apparent deficit.
Meanwhile, America is focusing on getting its own rare earth mines back online after decades of neglect. Yet, the Chinese have the United States by the short hairs—at least for the time being. Until the United States and its partners can secure the rare earth metals they need, the risk will increase, meaning that global prices will increase. This is another example of China outmaneuvering the United States.
To Break China’s Encirclement, We Must Go to Space
There is one, unconventional long term strategy for overcoming the Chinese advantage in this vital industry. That strategy is space mining.
China has encircled the United States in the rare earth industry. But the United States can still look up and go above the Chinese encirclement, thereby breaking it. Many of the celestial bodies in the solar system—including the moon and the millions of asteroids that separate the inner solar system from the outer planets—are chock full of these rare earths.
Once the United States establishes the infrastructure necessary for space mining, gaining access to a steady stream of these vital resources will be relatively easy. Besides, space mining could be a new market that would be worth trillions of dollars.
Yet, America has little time to implement a robust plan for capturing essential asteroids (and laying claim to resource-rich areas of the moon). China is already on the moon, testing the lunar surface to see where a viable mining colony can be established. The United States cannot simply hope that it can overcome the advantages China has spent years building up in the rare earth metals market.
What’s more, the current trade war with China is not going away anytime soon. The United States nevertheless has comparative advantages in the strategic domain of space. Those advantages are in danger of eroding, however, so time is of the essence.
By maximizing American commitment to space mining now, the United States can hope to never again be fearful of the Chinese in the essential rare earth metals market. Therefore, Congress must move federal research and development dollars into the budding space mining industry while at the same time encouraging American start-up firms to get to the moon and nearby resource-rich asteroids. Fast.
Space holds the key to America’s (and humanity’s) future. It is only a matter of time before a nation-state captures the strategic high ground of space and fully exploits it to their advantage. Chinese investment and commitment to space development means that the United States stands a real chance of losing out. And, as America’s comparative advantages in space recede, Washington will find itself increasingly hamstrung on Earth.
China has managed to corner key markets and integrate itself in the world economy. It has effectively encircled the United States in key areas. The only way to break Beijing’s encirclement, then, is to go above them and harness the seemingly limitless bounty that space has to offer before Beijing blocks that last refuge in their pernicious encirclement campaign.
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