Ritchie Torres Warns That U.S. Is 'Dangerously Complacent' About China's Chokehold On Minerals

5 months ago

During a House CCP Committee hearing before the Congressional recess, Rep. Ritchie Torres (D-NY) asked former ambassador to Japan Rahm Emanuel and former Australian Prime Minister Scott Morrison why the U.S hasn't been eager to establish mineral independence from China.

Transcript

00:00Representative Torres. Thank you, Mr. Chair. I see America's critical mineral dependency on China

00:06as our single greatest strategic vulnerability. In 2010 and 2011, China engaged in economic

00:13coercion against Japan, imposing export controls on rare earth elements, the first known instance

00:19of Beijing weaponizing its chokehold on critical minerals and rare earths against a foreign country.

00:25Since 2010, we have known that Western countries like the United States are dangerously dependent

00:31on China for critical minerals and rare earths. We have known that China is able and willing to

00:36weaponize its chokehold on critical minerals against adversaries like the United States.

00:41Despite knowing these dangers, the U.S. is no closer to achieving critical mineral independence

00:47than we were 15 years ago. In fact, China controls more of the world's rare earth refining today

00:55than it did back in 2010 and 2011 during its economic coercion of Japan. I guess my question is why has

01:02the United States been so dangerously complacent when it comes to breaking out of critical mineral

01:08dependency? America made itself energy independent from the Middle East, yet we seem to lack the same

01:14sense of urgency around making ourselves mineral independent from China. Why the discrepancy?

01:21Is that for either one of us? Yeah, either one of us.

01:27You want to go first, Mr. President?

01:27No, I'll follow you.

01:29Okay. Congressman, if I could take one step back.

01:33Yeah.

01:33We repeated for basically a decade that China

01:39China was an economic competitor or strategic competitor. And when President Xi comes to power,

01:47he makes a decision that China is a strategic adversary, not a competitor.

01:52It's a very different psychological outlook.

01:55Second, to your point, and why I advocate this in conjunction with an Article 5-like instrument tool,

02:06is to take an assessment of your vulnerabilities. I don't, if I could, as you went through basically

02:14two years of war in the Middle East, including with Iran, as you noticed, energy prices did not

02:20spike, and I know we all know this. It's been written, so I'm not violating any prior assignments.

02:26There were models where God forbid there was conflagration in the Middle East. You were going

02:30to see energy go to 140 bucks a barrel. That didn't happen. And why? Because of the United States.

02:37Full stop. And we worked at it over decades, did not abandon the effort of resilience as related.

02:46So you need exactly that type of resilience and study where your vulnerabilities are,

02:51what you need to shore up those vulnerabilities, not both yourself independently, but with allies

02:57and friends alike. So both reshoring and friend shoring and complacent. Magnets would be an area.

03:03Now, I know you would find it hard to believe, but as a middle child, I don't mean to destroy the

03:08comity of the group right now. But I say this because, as I noted earlier, Europe's

03:16plank post Lithuania. The only time they've thought of employing that unity was now with the United

03:25States because of how we're negotiating with the EU. They haven't deployed it, but they threatened to.

03:32So it was designed with China in mind, but it's actually looked at and made to be deployed with us.

03:40One of the problems for China right now is given the war in Ukraine by Russia,

03:45they have lost access to the European market. Leveraging, as the Congressman noted, our own

03:50market. That is a powerful force against China, plus our allies in the Indo-Pacific, Japan, Korea,

03:57Australia, New Zealand, India, Philippines, and other countries.

04:01So understanding how we organize as a group and put together that economic coalition with real tools

04:12to confront both their coercion and will foyer tactics in service of a larger interest is key

04:21to our long-term economic independence, our economic resilience, and our competition with China.

04:28I want to squeeze in one more question. There are reports that China has agreed to resume exports of

04:33rare earths to the United States in exchange for the United States resuming exports of H20 AI

04:38GPUs to China. And there are competing views, right? The argument from the administration

04:44is that it wants to make the world, including China, dependent on an American AI tech stack

04:49that includes Nvidia chips. But then the opponents argue that the H20s are just too computationally

04:55powerful. How should we view the deal? Should we see it as building an American AI tech stack or as

05:01American capitulation to China's economic coercion?

05:07Well, I think this goes to knowing where your red lines are, and in the point I made in response

05:14to another question. And these are either sensitive technologies which are aiding a strategic rival,

05:23or they're not. And that plays into the US's security interests, or it doesn't. But somewhere,

05:32that call needs to be made. And greater minds than mine will have to apply themselves to that in

05:37making that decision and evaluating that deal. And some will argue that Chinese tech will catch up,

05:47and they'll have their own versions of it, and they won't need it. In my experience,

05:53everyone can make whatever argument they want around these issues. But it all comes back to that

05:57fundamental question. What is the, what is the security interest? And what is the red line that

06:03you can and cannot cross? Mr. Congressman, what I would say is like in any review,

06:10you want to find where China's vulnerabilities are and make sure they're dependent on the United

06:14States or the free world in those areas. They have a tremendous amount of vulnerability to three

06:19sources, food dependence, energy dependence, and fear of their own people. And where those

06:27vulnerabilities are, we want to go at them and make them actually, rather than totally disengage,

06:34make them more vulnerable by making them more dependent.

06:37Could I also touch then and follow up to your earlier question, which is why has it been going

06:44on for so long? Because end users want cheaper prices. And China will give them the cheaper prices.

06:52And until there is a resolve to break that, that hold, which is a vulnerability at this end of the

06:59chain and in other end user parts of the chain, be that in Japan or, or elsewhere, you made the point

07:04about what occurred with Japan and rare earths earlier. That is true. And the answer to that

07:09was a company, an Australian company called Linus set up a rare earth processing facility in Malaysia

07:15with support from the Japanese government through JOGMEC. And that enabled such a process to provide a

07:22secure supply chain to Japan. Now, I applaud the Japanese government for the initiative they took,

07:27but took strong leadership. It put clear guardrails in place. And Linus is now building a plant

07:33in Texas, and which will do heavy rare earth processing. Now, the rare earths business is

07:40a pretty marginal business. And it doesn't take much to rattle it when you have price manipulations.

07:47And so the measure that's been taken with MP, I think is an excellent one, but it's one that

07:55should really be extended to allies and partners, whether they be in the United States or French or elsewhere.

Ritchie Torres Warns That U.S. Is 'Dangerously Complacent' About China's Chokehold On Minerals

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