HARRISBURG (TNS) — Although China has displayed bad faith in abundance, the ongoing economic battle is not limited to China’s disdain for international rules and norms, or even its abysmal record on intellectual property rights and its cover up of the COVID-19 crisis during the early stages of the pandemic. It is a struggle over global control of critical industrial materials, which are needed for U.S. security and clean energy technologies.
China is now the world’s leading supplier of minerals and metals, ranging from strategically important lithium and cobalt to rare earth elements, giving it great leverage over supply chains for developing high-tech consumer goods and weapons systems. Allowing China to strengthen its grip on control of crucial materials will leave the United States and other countries with little choice but to bend to its will. This would hobble important high-tech industries such as the semiconductor sector and telecommunications, cripple automobile manufacturers, threaten U.S. access to markets and resources, cost millions of jobs, and limit the United States ability to project economic power and political influence.
Despite the enormous stakes, the United States has failed to deter China from attempting to dominate the global production of critically important minerals and metals. This is why we must take action to reject the moderation of those who view China as a trustworthy and responsible player in global affairs. Regrettably, U.S. risk aversion has allowed China to reach the brink of total control over some key minerals.
China dominates the entire supply chain of lithium, a necessary ingredient in electric cars and storage for the electricity grid. It produces 80% of the world’s battery manufacturing capacity. China now possesses half of the world’s electric cars, thanks to the billions of dollars given to domestic companies in subsidies and other support. By scaling up the production of lithium-ion batteries, China is now poised to overtake established automakers and gain leadership in global electric-car markets. What’s more, global production of lithium needs to increase ten times or more by mid-century to meet demand for electric car batteries and other clean-energy technologies.
Semiconductors pose another difficult challenge. Maintaining U.S. production is important because chips are at the heart of most high-tech equipment, including weapons systems. What if China decides to retaliate against the U.S. by restricting the export of some critically important minerals? Semiconductor chips are made from a number of China-sourced minerals such as gallium, silicon, boron and germanium.
Among the other industries that rely on China-sourced minerals and metals are robotics, wind turbines, advanced aircraft, and industrial drones.
The good news is that although China has made huge strides toward global control of industrial materials, it is not in total control yet. But if this trend continues, the United States will face dangers to its economic security and a trade deficit so big that no combination of tariffs and domestic production can save us. However, we can reverse this trend and regain U.S. leadership through an industrial policy of government and industry working together to reach national security goals.
For this strategy to succeed, there needs to be more domestic investment in new products and new technology. And there should be a requirement that the Government purchases U.S.-made products to the extent possible.
Government investment in the economy used to be anathema to free-market conservatives. But when the Senate voted this summer on legislation that would direct billions of dollars to the semiconductor manufacturers, every Democrat and nearly every Republican supported it. That is the strongest sign yet that industrial policies which allow the government to identify the industrial sectors most critical to national security and economic growth, and spur investment in them is gaining support among conservatives and liberals alike.
(Dr. Forrest J. Remick is an emeritus professor of nuclear engineering and emeritus associate vice president for research at Penn State University and the retired commissioner of the U.S. Nuclear Regulatory Commission.)