China Needs to Grow Up, US Needs to Wise Up

The story of rare earth minerals has many lessons, writes Paul Krugman
By Matt Cantor,  Newser Staff
Posted Oct 18, 2010 1:21 PM CDT
China Needs to Grow Up, US Needs to Wise Up
In this photo released by China's Xinhua News Agency, a detained Chinese fishing trawler is flanked by two Japanese Coast Guard vessels during an investigation by Japanese authorities Sept. 12, 2010.   (AP Photo/Xinhua, Ji Chunpeng)

When Japan detained a Chinese fishing boat captain whose vessel had collided with two of its Coast Guard ships, China cut off its access to rare earths, the essential minerals on which China has a near-monopoly. For Paul Krugman, this highlights two concerns: First, that the US let “unreliable” China get “a stranglehold on key materials”; second, that new economic superpower China isn’t ready for the role, he writes in the New York Times.

This debacle proves we need to “develop non-Chinese sources” of these rare earth minerals, which are key to high-tech devices. The US dominated production until the mid-1980s, at which point China elbowed us out of the market thanks to its low processing costs (the result of cheap labor and flimsy environmental standards). We have the material, but it will take “both time and financial support” to create the facilities we need; we also need to put money into "urban mining"—recycling these minerals in our used electronic devices. Meanwhile, in China, we’re seeing “a rogue economic superpower, unwilling to play by the rules," he writes. "And the question is what the rest of us are going to do about it.”
(More Paul Krugman stories.)

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