With a more focused approach, it could break China’s chokehold
Miners installing a US flag on top of a pile of mining deposits
Illustration: The Economist/Diego Mallo
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I N 1973 a club of Arab petrostates held the world to ransom by halting crude-oil exports to countries they accused of supporting Israel. Petrol prices soared; Western economies buckled. Today the danger is that China will use its grip on other natural resources to achieve its aims, such as seizing Taiwan. It has already shown its power by choking off exports of rare-earth metals last year. That is why America is staging its biggest intervention in commodity markets in decades.
The battleground is the supply of “critical” metals, a group of minerals vital to making military, electrical and computing infrastructure—everything modern economies need to be safe, high-tech and green. China supplies most of these: it mines about 80% of the world’s tungsten, for instance, and refines 99% of its gallium. This is spurring America into an all-out campaign to diversify its sourcing of 60 minerals. It has pledged billions of dollars to dozens of mining projects at home and abroad, floated plans to create price floors and trade blocs, and announced a vast stockpile to cover months of national needs. The risk now is that America depends too much on its scattershot efforts—and that, in seeking control, it breaks the flexible and resilient system of market incentives that ensures the smooth functioning of the global economy.
China’s grip on critical minerals has exposed the West’s most serious strategic weakness in many years. Last April, during its trade war with America, China restricted exports of seven crucial rare earths; it targeted another five in October. Nearly a third of Pentagon procurement programmes faced the risk of shortages, as did industries from carmaking to renewable energy. The prospect of large-scale disruption prodded President Donald Trump into a trade truce with Xi Jinping, as well as a relaxation of American controls on some technology exports. Yet Mr Xi can deploy the weapon again whenever he chooses. Meanwhile, exports of rare earths for dual-use applications—the expanding grey zone between military and civilian uses—remain largely barred, sapping Western efforts to rearm.
It would be nice to say that the best defence against China’s tactics is to double down on global markets. They certainly have a part to play. The oil crises of the 1970s boosted the development of commodity trading—in which prices for key materials are set on exchanges by millions of buyers and sellers entering 40m derivatives contracts daily. Time and again, hit by wars, industrial strikes and natural disasters, markets have handled shocks better than government planners ever could.
However, America is right. China’s dominance over critical minerals means that continuing to place full faith in the invisible hand would be naive and unsafe. China has spent decades building control over minerals, bankrolling projects at home and acquiring assets abroad. Its producers have consolidated into behemoths that the state can control and which have the market power to deter would-be competitors by flooding global markets—even if that means taking temporary losses.
America’s task, therefore, is to strike a balance. On the one hand, it needs to insure against the risk that China cuts off exports again, and to deter it from doing so by raising the cost of further restrictions. On the other, it needs to nurture markets. Subsidies and stockpiles are expensive. State-to-state mineral agreements invite rent-seeking, side deals and corruption—a risk with the Trump administration. Dirigisme muffles the price signals that encourage conservation and innovation.
Unfortunately, America is mismanaging these trade-offs. Officials seem to deem almost any expense to be an acceptable price for security. Money is being spread wastefully thin, not focused where China’s grip is tightest, in refineries and smelters. From Delaware to the Democratic Republic of Congo, chancers are pitching the administration dud projects in the hope of easy money. In return for peace in Ukraine (on his terms), Vladimir Putin is promising Mr Trump a bogus $12trn in deals, including lots in energy and mining.
America’s campaign should instead follow three principles. The first is to narrow the scope. Not all 60 minerals it deems critical genuinely are. Aluminium, lead and zinc are abundant, recyclable and substitutable; China would struggle to corner vast industrial-metal markets like copper. America should therefore concentrate on niche, vital metals, such as some rare earths, where China can more easily restrict exports. Priority should go to critical industries—defence, and perhaps health care—leaving carmakers to fend for themselves. America should focus on projects near completion. Even keeping a small share of supply out of China’s control can break its chokehold, because Mr Xi will know that America has alternatives.
A second principle is to use all the tools at hand. America’s targeted stockpiles can cover immediate needs in a crisis, and its purchase contracts at pre-agreed prices can attract private investors and get projects off the ground. But it must also attend to refining and processing. Refiners that produce one main metal often leave critical by-products in waste rock, because processing costs too much. Conditional state backing could change their calculus.
Throughout, however, America must strive to ensure that price signals get through—the third principle. The economy will continue to adapt and innovate only if buyers and sellers face high prices when supply is limited. By contrast, low fixed prices will exacerbate dependence.
Shovel ready
For the Trump administration, national security means America First. That is translating into a race to lock up scarce supplies at others’ expense, causing its allies to worry they will be left behind. But even an administration that doubts the utility of military alliances should work with others over natural resources. Europe has engineering expertise; Japan, an earlier victim of China’s mineral blackmail, has experience in securing supply chains. Together they bulk up the market. Against China’s geology, industriousness and political system, America’s ability to work with others is its greatest asset. ■
논증 분석
유형: prescription
핵심 주장
America는 핵심 광물 확보를 위한 대규모 개입을 추진 중이나, 현재의 산만한 접근 방식은 비효율적이며, 범위 축소·다양한 수단 활용·가격 신호 보존이라는 세 원칙에 집중해야 China의 지배력을 효과적으로 깰 수 있다.
논리구조
- 전제: China는 핵심 광물 공급망을 수십 년에 걸쳐 장악해왔으며, 텅스텐 채굴의 80%, 갈륨 정제의 99%를 통제하고 있어 서방의 가장 심각한 전략적 약점을 형성하고 있다.
- 진단: 2025년 China는 미·중 무역전쟁 중 희토류 7종의 수출을 제한했고, Pentagon 조달 프로그램의 3분의 1이 부족 위험에 처하는 등 China의 광물 무기화는 이미 현실화됐다.
- 논거: 시장에만 의존하는 것은 순진하고 위험하다. 1970년대 석유 위기 이후 원자재 거래 시장이 발전했지만, China는 국가 주도로 생산자를 대형화하고 시장 침수(flood) 전략으로 경쟁자를 억제할 능력을 갖추고 있어 ‘보이지 않는 손’에 전적으로 의존할 수 없다.
- 진단: America의 현행 대응은 잘못 관리되고 있다. 60개 광물 전체에 자금이 분산되어 낭비되고 있으며, China의 장악력이 가장 강한 정제·제련 부문에 집중되지 않고, Delaware부터 Democratic Republic of Congo까지 부실 프로젝트에 자금이 투입되고 있다.
- 반론: Vladimir Putin이 Donald Trump에게 우크라이나 평화의 대가로 에너지·광물 분야 포함 12조 달러 규모의 허위 거래를 약속하는 등, 국가 간 광물 협정은 지대추구·부패의 위험을 내포한다.
- 처방: 첫째, 범위를 좁혀야 한다. 알루미늄·납·아연 등 풍부하고 대체 가능한 광물은 제외하고, China가 수출 제한을 쉽게 할 수 있는 일부 희토류 등 틈새 핵심 금속에 집중하되 국방·의료 등 핵심 산업을 우선해야 한다.
- 처방: 둘째, 가용한 모든 수단을 활용해야 한다. 비축 재고와 사전 합의 가격 구매 계약으로 민간 투자를 유도하고, 부산물 처리 비용 문제를 안고 있는 정제·가공 부문에도 조건부 국가 지원을 제공해야 한다.
- 처방: 셋째, 가격 신호가 작동하도록 보장해야 한다. 고정 저가 정책은 의존도를 심화시키므로, 공급 부족 시 가격이 오르는 시장 메커니즘을 유지해야 경제의 적응과 혁신이 계속된다.
- 처방: America는 동맹국과 협력해야 한다. Europe의 엔지니어링 전문성, Japan의 공급망 확보 경험을 결합하면 시장 규모를 키울 수 있으며, 동맹 협력은 China의 지질학적·산업적·정치적 우위에 맞선 America의 최대 자산이다.
결론
America가 핵심 광물 전략을 성공시키려면 산만한 전방위 접근을 버리고 진정한 취약 광물에 집중하며 시장 가격 신호를 보존하고 동맹국과 협력하는 원칙 중심의 전략으로 전환해야 한다.
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