Opinion | New US-led minerals bloc renews pressure on Asia to pick sides
For Asia’s China-linked economies, the challenge is to remain open to all opportunities while safeguarding supply chains of the future
For decades, the global economy has operated on a simple premise: efficiency above all else. We built a world where goods flowed to wherever they could be produced at the lowest cost, creating a vast, interconnected web of supply chains that ignored geography in favour of the bottom line.
That era is coming to a close. Events in the past week in Washington underline the emergence of a more muscular age of geoeconomics where the flow of the world’s most essential materials is being reordered by the visible hand of the state instead of the invisible hand of the market.
The logic behind this move is straightforward. Today, China controls roughly 70 per cent of global rare earth mining and more than 90 per cent of its processing. For Washington, this is a profound national security vulnerability.
However, for Asian nations, this initiative presents a potentially painful dilemma. The global green transition – the massive shift towards renewable energy and decarbonisation – requires a vast amount of minerals. By moving to create a closed loop of allied supply chains, the US is effectively asking Asian economies to choose between two competing systems.