A CFR Energy Report
Overview
Eugene Gholz analyzes the economic and security consequences of China’s central position in the global rare-earths market.
He discusses the evolution of the rare-earths market, which is critical to many defense, energy, and other high-tech products, and potential vulnerabilities posed to global trade resulting from China’s near-monopoly of the industry.
Gholz explains why the alleged 2010 Chinese embargo of the market, which highlighted the prominence of rare earths, did not exact a greater cost on countries with rare-earth dependent supply chains, such as Japan and the United States, citing supply growth opportunities and administrative difficulties, as well as real-time adjustments in the global market.
Gholz also examines the evolution of Chinese influence since 2010, particularly in light of capital investment and technological advances that have made non-Chinese producers more competitive.
Based on his analysis, Gholz provides lessons to policymakers facing future raw materials threats, arguing that dependence on imported rare-earth products brings less national security risk than many have feared.
Eugene Gholz is an associate professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. He works primarily at the intersection of national security and economic policy, on subjects including innovation, defense management, and U.S. foreign policy. From 2010 to 2012, he served in the Pentagon as senior advisor to the deputy assistant secretary of defense for manufacturing and industrial base policy, working on various issues including the response to the rare earths crisis. Before working in the Pentagon, he directed the Lyndon B. Johnson School’s master’s program in global policy studies from 2007 to 2010. He is the coauthor of two books, Buying Military Transformation: Technological Innovation and the Defense Industry and U.S. Defense Politics: The Origins of Security Policy. His recent scholarship focuses on energy security, including recent articles on political-military threats to global oil markets and on U.S. Department of Defense investment in energy innovation. He is also a research affiliate of Massachusetts Institute of Technology’s Security Studies Program and a member of the Council on Foreign Relations. His PhD is from MIT.
http://www.cfr.org/energy-and-environment/rare-earth-elements-national-security/p33632?cid=nlc-press_release-press_note–link3-20141021&sp_mid=47239378&sp_rid=ZGFuaWVsLmRyZXpuZXJAdHVmdHMuZWR1S0&utm_source=The%20Sinocism%20China%20Newsletter&utm_campaign=809323b4f2-The_Sinocism_China_Newsletter_10_22_14&utm_medium=email&utm_term=0_171f237867-809323b4f2-24566833&mc_cid=809323b4f2&mc_eid=51657a030b