Foreign direct investment
Rare earths: The threat of embargo and the clash of systems
Published 18 June 2019 | 1 minute read
Would China’s rumored embargo on rare earth exports be an effective weapon in the trade war?
The divergent fortunes of the American and Chinese rare earth industries over the past 40 years is a reflection of the two contrasting political economic systems. It has been a text book example of the power of China’s statist approach to industrial policy to engineer a competitive advantage and capture advantageous industries in the supply chain by exploiting the weaknesses in the market system. It also exposes flaws in the US’ approach to managing its own national interests.
If an embargo were to happen, it would not be the first time that China has used export restrictions of rare earths for geopolitical purposes.
Our white paper, “Rare Earths: The Threat of Embargo and the Clash of Systems”, describes how the present situation of dependence on China for rare earths came about, and the potential impact of embargoes.
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