Here’s a letter to the Wall Street Journal:
Editor:
You’re correct that “Trump has no China trade strategy” (June 12). Nearly all trade talk coming from this administration is economically incoherent bluster from which we Americans can expect only diminished prosperity.
You err, however, in describing China as having a “stranglehold on rare-earth minerals.” China is indeed today’s largest supplier of these minerals. But as your own pages reported last month – in a piece titled “Rare-Earths Plants Are Popping Up Outside China” – “China mines some 70% of the world’s rare earths, the 17 metallic elements primarily used in magnets needed for civilian and military technologies. But its 90% share of processing for rare earths mined around the world is what really concerns officials from other countries working to secure their supply.” Your reporters then reveal that this concern is already prompting companies to build rare-earths processing plants outside of China, including in the U.S
Regarding known rare-earths deposits, these exist in many places outside of China. And as Marian Tupy recently wrote in your pages about an earlier attempt by Beijing to abuse China’s comparative advantage at supplying rare earths, “market mechanisms undermined China’s attempt at resource leverage. In the early 2010s, supply growth outside China accelerated.”
As with petroleum and other extractive products, the profit motive reliably prompts private firms to explore for additional deposits of rare earths, as well as to increase the capacity to process these minerals, whenever the expected profitability of such exploration and processing grows. Private firms need no prodding by politicians or bureaucrats to be alert to potential abuses by China of its position as leading rare-earths supplier. Such abuses, if and when they occur, will be sufficient to incite the private sector to reduce America’s reliance on Chinese rare earths.
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
