Knowledge is power: Why America needs economic security intelligence

Excerpt America was unprepared for its trade war with China, but it shouldn’t have been. As Beijing cut off access to critical minerals, the United States had no response but a quiet retreat. The Trump administration’s recent push to rebuild mining and processing capacity is welcome, but it comes more than a decade late. Strategic surprises of this kind are avoidable—but only if the United States systematically monitors economic security risks before they become crises. A new system of country-level Economic Security Intelligence Reports should become a cornerstone of American economic statecraft. In 2010, China put the world on notice, weaponizing supply chains by cutting off rare earth exports to Japan during a territorial dispute. For 15 years, Washington stood idle as China deepened its dominance across critical minerals, batteries, shipping and industrial inputs essential to American manufacturing. Today, China produces 98 percent of the eight heavy rare earth elements, and once again is restricting access for both Japan and the United States. Beijing is making the most of its economic leverage to weaken American competitors, imposing additional rare earth restrictions on key U.S. customers just this June. The International Energy Agency now estimates that full implementation of China’s rare earth export controls could put an annual $6.5 trillion in downstream production at risk—7 percent of global GDP excluding China. Josh Birenbaum is the deputy director of the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies. Antonia-Laura Pup is a PhD researcher at the European University Institute and former CEFP intern.