Recommended Weekend Reading

April 14-16, 2023

Here are our recommended reads from stories we saw in the last week. We focus this week on the rapidly accelerating search for critical minerals needed for alternative energy and electric vehicles. Let us know your thoughts and if you or a colleague want to be added to our distribution list. Have a great Easter and a week ahead!

·       “A Fresh Look at North Korea at Night” 38 North

In January 2014, astronauts on board the International Space Station (ISS) took a photo that dramatically illustrated the economic divide between North Korea and its neighbors. It showed both South Korea and China bathed in nighttime light while North Korea was largely dark. Nine years on, has anything changed? And what does that mean for assessing North Korean risk to the region (and the world)? 38 North (a publication of the Stimson Center in Washington, DC) offers an in-depth interactive assessment of what has changed and why.

·       “How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold” Carnegie Endowment for International Peace

China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. This study shows how China’s Belt and Road Initiative helped build an industrial complex in Indonesia—but contestations at the local and national levels compelled Chinese players to adapt to rapidly shifting Indonesian cross-currents.

Will the scramble for rare earth produce a transatlantic trade accord?  Peterson Institute for International Economics

As the world invests heavily in the digital economy and green transition, the need for these rare earth elements—including bauxite, cobalt, lithium, and nickel—will increase five to six times by 2030 and seven times by 2050, according to estimates by the European Commission and the World Bank. But the European Union and the United States import 98 and 80 percent, respectively, of these rare earth from China, which controls large parts of the world’s mining and processing. In a recent meeting, EU Commission president Ursula von der Leyen and President Joseph R. Biden discussed a rare earth/critical mineral strategy and jointly announced that they would immediately begin negotiations on a targeted critical minerals agreement. A future deal could lead to the EU being treated as an equal partner in an equivalent of a free trade agreement, thereby qualifying the EU for certain tax credits for electric vehicles in the IRA. The objective is to have an agreement where critical materials sourced or processed in Europe are recognized as sourced or processed in the US. 

Several countries in the EU have minerals deep underground—for instance, France, Greece, Greenland, Portugal, and northern Scandinavia. LKAB, the state-owned mining company in northern Sweden, estimates that most critical minerals can be found in Swedish territory, with reserves measuring a million tons, potentially making Sweden the biggest supplier in Europe.

·       “Schell on the Long Arc of US-China and Long Reach of Leninism” ChinaTalk podcast on Spotify

How did Chinese President Xi Jinping’s formative years influence how he views the world today?  Very few in the West understand what formed him. Veteran China scholar Orville Schell, the Arthur Ross Director of the Center on U.S.-China Relations, looks back at decades of writing and working on China, weathering the cycles of the country opening up and shutting down, and gives his two cents on what’s going on in Xi’s head.

Chart of the Week 

The Spiking Demand for Critical Raw Materials And the Few Countries Which Produce Them

China has moved to restrict the export of raw materials critical for green technologies.  But they are not alone – India, too, has placed new restrictions on their exports.  But China dominates the production supply chain, as the chart below shows.  As the US and EU move to aggressively ramp up the production of electric vehicles and alternative energy production facilities, there is a only a few countries that produce these raw materials – setting up a major geopolitical race for access.