DE-RISKING IS NOT SO SIMPLE
China’s model may not be the most efficient, but it is robust. That is why the Western consensus on how to “de-risk” deserves a harder look.
Reducing dependence on China is not as simple as switching a few suppliers; it demands the cultivation of comparable industrial density.
Efforts to build rare-earth supply chains that are independent of China show that this is easier said than done.
Since China suspended exports of processed rare-earth elements to Japan in 2010, Japan has made considerable progress in building its own supply chain. But the Japan-funded Malaysian facility operated by Australian mining company Lynas Rare Earths has come under fire over its waste-management practices and radioactivity concerns.
The United States also began paying attention to rare-earth risk in 2010, with the Department of Energy releasing its first critical-minerals strategy that December. Mining for rare earths was resumed in California the following year, but abandoned four years later.
While it was restarted in 2017, output is still shipped to China for refining. Though the US is now placing a high priority on rare earths, even threatening to annex Greenland to gain access to them, it has a long way to go.
Eventually, the West presumably could “decouple” from China. But that matters little if it cannot rebuild its own industrial density, including supplier networks, skills, tooling, and patient finance.
Tariffs may buy a little time. But only industrial ecosystems as robust as China’s can buy leverage.
Robin Rivaton is CEO of Stonal, a European technology company, an AI sherpa to the French business confederation MEDEF, and an affiliate of the Paris-based think tank Fondapol. This commentary first appeared on Project Syndicate.
https://www.channelnewsasia.com/commentary/china-tariffs-manufacturing-subsidies-wrong-narrative-5933926
