Creative Destruction and Manipulation: The Metamorphosis of China's Rare Earth Elements Industry
Winship, Luke Gorjance
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This paper will attempt to bring together a history of rare earth elements, in general terms but more importantly in the case of the Chinese industry, as well as current events reporting, analysis, and forecasting. This is in an effort to provide both a general sense of rare earth elements and their importance to our modern world, but also to argue how China's rare earths industrial strategy is providing long-term stability and increased equity and diversification, ironically while providing first and foremost for itself, most recently deliberately at the expense of other countries, as noted in the WTO ruling. China has indeed turned the international trade in rare earths on its head, in the Span of two decades moving from marginal player to a dominant position in the market. Initially, this proved mutually beneficial for both China and Western economies such as those of the United States, the European Union, and Japan. In recent years, however, this relationship has soured, with concerns over resource and environmental sustainability, national security demands, and captive supply, all culminating in a showdown between supplier and consumers in the WTO. However, the WTO ruling was not so much a victory, as it has been deemed in the West, as it was a tangential incident in an otherwise methodically executed outcome. Through considering the deliberateness of China's leaders and their economic intentions and national aspirations-while also calling attention to China's problematic ethics, ranging from its environmental impact to international trade practices-this paper will argue that China has patiently, persistently, and methodically exploited the rare earth market. It used its own massive reserves, first to become a near-monopoly supplier to developed economies, then to leverage their supply in exchange for foreign direct investment and technology transfers, with the ultimate goal of instead restricting its rare earths industry to propel China's downstream manufacturers past even the West's most advanced competitors. This paper is therefore seeing China not just for what it was, and is, but for what it may become as well, and ultimately shows how China engineered an outcome that has serendipitously benefited even its most vocal detractors.