Perhaps lost in the shuffle this week amid an aborted coup in South Korea, Syria, genocide, the collapse of the French government, elections annulled in Romania over TikTok videos, and Biden’s pardons was the step taken by Beijing in the trade war that Washington is determined to keep escalating. And should China go further, it could ultimately force the US to begin scaling back its military operations and support for proxies across the globe.
That’s because the US — and its and its vassals’ militaries — are dependent on China for a range of minerals which China is increasingly restricting access to in response to US economic warfare. In this case it was Washington’s latest effort to cripple China’s chip industry.
Beijing responded with what amounts to another warning shot. It banned exports to the US of the critical minerals gallium, germanium and antimony and requires stricter review of end use for graphite items. Announced on Tuesday, they strengthen enforcement of existing restrictions on critical minerals exports to the US that Beijing began rolling out last year.
Chinese antimony restrictions were already put in place back in August, and exports have since dropped 97 percent. And unwrought germanium or gallium was already under unofficial restrictions as none had been sent to the US for a year. Formalizing the curbs is another step up and intended to send a message — one US officials seem unwilling or incapable of receiving.
America’s plutocrat-funded think tanks expect the US to continue pushing ahead with more tariffs and technology restrictions. And the Chinese could counter with tighter controls on more strategic minerals.
Beijing has plenty of other options, and its updated framework will also reportedly allow it to quickly and effectively implement new export bans on other strategic minerals on the list. According to the AP, it is believed that next on the list of potential bans are tungsten, magnesium and aluminum alloys. All Beijing needs to do to really put the squeeze on the US is start moving its way up the following chart. If it gets to the 16 critical minerals under the rare earths umbrella, Washington could be in big trouble.
As Al Jazeera reports, gallium and germanium are used in semiconductors while germanium is also used in infrared technology, fibre optic cables and solar cells. Antimony is used in bullets and other weaponry while graphite is the largest component by volume of electric vehicle batteries. Here’s a brief breakdown on what a wider range of minerals are primarily used for:
And all the US proxy wars, already facing shortages from the “arsenal of democracy,” could be ground to a halt due to mineral disruptions. Here’s the Modern War Institute at West Point sounding the alarm on the problem while simultaneously (and hilariously) calling for preparations for conflict with China:
The US military is attempting to quickly replenish diminished weapons stocks in its largest production ramp-up in decades. With an eye on its pacing threats and the risk of major conflict—with China, in particular—it is transitioning to modern platforms, including attack submarines, heavy bombers, and air defense systems, as well as new approaches to electric vehicles. Given its security assistance to Ukraine and recent military support to Israel, and conflict risks with China, it is simultaneously rearming with legacy munitions—155-millimeter artillery, Javelin antitank missiles, and surface-to-air Stinger missiles. Because of the quantity of minerals required to meet these dual demands, for replenishment of munitions and construction of new platforms, both endeavors could be put at risk. Specifically, the mineral supply chains that the US military depends on could face overwhelming demand and possible supply disruption.
The Modern War Institute goes on to call for stockpiling, domestic mines, and mineral recycling.
Yet while Beijing continues to make advances in producing its own advanced chips — a process jumpstarted by US efforts to deprive them of such tech — the US is not making the same progress breaking China’s hold on strategic minerals.
In 2022, the US designated 50 minerals as critical to the economy and national security, including many used in military equipment. According to TD Economics, China dominates the global production of more than half of the critical minerals outlined by the U.S. government
China continues full steam ahead on its own enormous effort to secure mineral supplies for its industry and dominate the global supply chain:
Source: The Oregon Group
As we can see, however, the ownership of mines is still quite diverse:
Source: The Oregon Group
Where China really exerts its influence is on the refining, which it dominates. From The Oregon Group:
China accounts for approximately 85% of global critical mineral processing capacity. For example,
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China dominates almost the entire graphite anode supply chain end-to-end
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China processes nearly 90% of the world’s rare earths
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over 60% of global processing for lithium and cobalt occurs in China
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over 40% of copper refining is done in China, an increase from under 40% last year, and expected to increase to over 50% from 2030
Breaking that stranglehold is not easy nor fast. It can take five to ten years to get refining operations up and running. And yet there seems to be a belief among the policy makers and think tankers that the US will simply shift supply chains away from China, increase domestic production, and find new import sources.
The International Energy Agency is not among the believers in the US strategy. Its estimates show that almost half of the market value from refining will come from China by 2030 and continue to increase over the next decade from there. More from The Oregon Group:
Spending by China on developing and acquisition of overseas mines hit a record US$10 billion in the first half of 2023, focusing on lithium, nickel and cobalt.
According to GlobalData, the number of planned mines owned by Chinese companies, under development or exploration, is set to double.
In many cases, the US and European companies helped China get to where it is now. From the Wall Street Journal:
For more than a decade, Chinese companies have spent billions of dollars buying out U.S. and European miners in Congo, which produces nearly 75% of the world’s cobalt supply. That has put China in a dominant position in both the production and processing of the mineral.
The Biden administration has pledged billions of dollars in investments in infrastructure projects across Africa, including a railroad intended to carry Congolese minerals such as copper and cobalt across Angola to the Atlantic Ocean port of Lobito. But it has been difficult for the U.S. government to interest American investors in any sector in Congo because the country’s poor infrastructure, limited skilled labor, resource nationalism, and reputation for government corruption.
The amusing fact that the US is incapable of building infrastructure because of a lack of existing infrastructure highlights a very real problem that makes it virtually impossible for Washington to overcome China’s dominance in refining. As Ian Welsh succinctly puts it, You Can’t Run Industrial Policy OR A War Economy Under Neoliberalism.
And so if we go back to the US trying to secure minerals from Africa, we see what one of the biggest hurdles is: US investors want more sweeteners from Washington before committing. According to the WSJ, those include financial support, insurance against expropriation or sudden tax increases, and waivers to the Foreign Corrupt Practices Act.
Elsewhere, companies like Perpetua Resources, which is developing the only US antimony mine in Idaho, are receiving massive government handouts in the name of national security.
It’s an arrangement that’s worth taking a quick look at. The largest shareholder in Perpetua is the former Wall Street hedge fund manager Paulson & Co., and the chairman of Perpetua is Marcelo Kim, a partner at Paulson.
If Paulson & Co. sounds familiar, that’s probably because it was in on the ABACUS investment, paying Goldman $15 million to put together a collection of toxic subprime securities sold by Goldman to long investors so that Paulson could bet against it. John Paulson, whose multi-billion payoff on that bet turned him into a superstar in some circles, later stopped managing money for outside clients and turned his firm into a family office.
Are these really the people the US is relying on to supply antimony necessary for the country’s beloved bullets?
It’s quite the reward for Paulson. Perpetua Resources gets a $1.8 billion low interest loan, the Pentagon is covering the permitting costs, once the Idaho mine is up and running Perpetua will have a monopoly on domestic supply of antimony, which also happens to be skyrocketing in price — up more than 200 percent this year.
It’s convenient for US policymakers to believe that by further enriching the wealthy and well-connected that will somehow unleash that famous American ingenuity and magically solve the problem, but there’s little evidence it’s working.
US overreliance on China has been known for some time and yet the problem never seems to improve. Seemingly every month there’s a new proclamation like “the recent discovery of lithium reserves in southwest Arkansas may enable us to reshape the balance of power in global mineral markets” while simultaneously rebuilding America’s “industrial base.”
Ah yes, the industrial base that each successive administration now tries unsuccessfully to bring back. The day after China unveiled its export restrictions, there was a hearing on Capitol Hill entitled, “The Imperative to Strengthen America’s Defense Industrial Base and Workforce.”
What does that look like? According to Responsible Statecraft, ‘witnesses proclaimed that deep-tech innovations including AI, autonomy, software and adjacent tech are vital to both the development of state-of-the-art weaponry but also towards the “hyper-scaling” of production processes key towards developing competitive arsenals.’ More:
The hearing’s witnesses may well believe their efforts bolster America’s competitiveness and national security in increasingly tenuous times. And yet, their affiliations suggest their efforts also line their pockets, all while advancing contentious AI-backed and autonomous military production and weapons systems.
What this strategy ignores is that by sweetening the pot for investors on Wall Street and in Silicon Valley, Washington is turning to the very same people who created the problem in the first place.
Key Point Memory Holed
You can read countless stories from the media and think tanks about the dangers of US reliance on China, and not a single one will mention how American financiers put the country in this position. For a refresher we can turn to a magisterial 2019 piece from Matt Stoller and Lucas Kunce at The American Conservative.
Their story of lost American leadership and production describes the destruction of America’s once vibrant military and commercial industrial capacity due to public policies focused on finance instead of production. Here’s the brief history:
Bill Clinton took the philosophical change that Reagan had pushed on the civilian economy, and moved it into the defense base. In 1993, Defense Department official William Perry gathered CEOs of top defense contractors and told them that they would have to merge into larger entities because of reduced Cold War spending. “Consolidate or evaporate,” he said at what became known as “The Last Supper” in military lore. Former secretary of the Navy John Lehman noted, “industry leaders took the warning to heart.” They reduced the number of prime contractors from 16 to six; subcontractor mergers quadrupled from 1990 to 1998. They also loosened rules on sole source—i.e. monopoly—contracts, and slashed the Defense Logistics Agency, resulting in thousands of employees with deep knowledge of defense contracting leaving the public sector.
Contractors increasingly dictated procurement rules. The Clinton administration approved laws changing procurement, which, as the Los Angeles Times put it, got rid of the government’s traditional goals of ensuring “fair competition and low prices.” They reversed what the New Dealers had done to insulate American military power from financiers.
The administration also pushed Congress to allow foreign imports into American weapons through waivers of the Buy America Act, and demanded procurement officers stop asking for cost data. Mass offshoring took place, and businesses could increase prices radically.
This environment attracted private-equity shops, and swaths of the defense industry shifted their focus from aerospace engineering to balance sheet engineering. From 1993 to 2000, despite dramatic declines in Cold War military spending and declines in the number of workers in the defense industrial base and within the military, defense stocks outperformed the S&P.
Stoller and Kunce’s conclusion:
In short, the financial industry, with its emphasis on short-term profit and monopoly, and its willingness to ignore national security for profit, has warped our very ability to defend ourselves.
That diagnosis assumed that the US national security industry exists to defend Americans, however. If we cast our gaze out over the world’s bloodstained landscape today where the US proxy forces of Nazis, jihadists, and Zionist genocidaires are busy setting the world on fire today, it’s hard to come to any conclusion other than the fact that we are the bad guys.
If that’s the case and the US defense industry is primarily a tool to spread freedom for the plutocrats to rape and pillage more of the earth, well, would it be such a bad thing if the Chinese took advantage of our ruling class’ greed to pull the plug?
Well at this point the US can hardly go to Russia and ask them to make up the shortfall. The Russians would likely send Washington an anvil as a message. But China has a lot more options than just putting a halt to some raw materials as they work their own way up the escalation escalator. They might do the same for strategic spare parts or medicines or any number of goods and services that the US has outsourced out of the country. Sure, somebody like Trump can say that they will make those goods themselves in the US and turn on the printer that goes brrrrr but it will not be enough. Apart from the fact that all that expertise going into those industrial process has mostly evaporated, most modern corporations would take all that government money, spend many years “attempting” to recreate that industrial capacity, and come up with a minimal product/process not fit for purposes. It will be like the F-35 project writ large.
Another thing is the fact that so many computer, automobile, industrial and household products are made in China. How would the US have any leverage over a country that basically controls most of our industrial base? Even if we tried to have an active war with China, most of our military hardware and vehicles have components that are made in China, so I think that the US would lose before any sort of war with China could start. It would take decades to reshore all of the industries that we have sent off there, and that is even if the US was serious about doing so.
I know that the US economy is largely based on military Keynesianism, but how can you win against the very country that the industrial part of the MIC is based on?
Unfortunate formulation:
Chinese antimony restrictions were already put in place back in August and have since dropped 97 percent.
The Chinese exports of antimony have dropped by 97%, not the restrictions. But in the context of the discussion, we get the point.
Thanks for catching, vao. Fixed.
There is one crucial element missing in this analysis – recycling. Most of these materials don’t come from raw resources, they come from recycling existing materials – in the case of very expensive trace materials, this is invariably the most cost effective way to do it. 60% of all US copper comes from recycling, and you’ll find similar percentages in rare earths like antimony and germanium. Precise figures can be hard to come by as many companies/industries keep this to some degree in house – so ‘real’ rates are almost certainly higher than reported. Recycling rates invariably rise over time as more suitable scrap becomes available and the processes are improved. Most recycling is fairly localised (although of course China is a big player in this too).
Without building into your projections recycling rates and the potential for reducing or replacing these materials, the predictions rarely come true. While its certainly true that the west took its eye off the ball when it came to a wide range of minerals, its also true that the industry is very good at promoting scare stories to try to extract yet more subsidies from governments, or just pressurise them into reducing environmental protections.
Recycling is limited by the recycling rate. For example,tglobal recycling rate for tungsten carbide tooling is 46%.
The non-recycling rate of tungsten carbide is then 54%, so more than half of worn tungsten carbide cutting products are “lost” every year.
A few years of compounding 0.46 shows the need to find new virgin tungsten to replace what is lost.
Tungsten carbide tooling allows machining equipment to be run at higher speeds than the previous high speed steel. And tungsten carbide can cut harder materials.
Recycling can help with supply issues, but perhaps the recycling rate is rather inelastic and is already factored into the price and supply of tungsten.
A restricted supply of tungsten could hurt industry, including defense, particularly if supply is restricted over a few years.
I spent years in the 1960s analyzing the copper market. Recycling was the key. When Cooper prices rose (I think to 90 cents), copper became one of the largest items of theft in the United States.Copper drains, wiring etc were taken here in New York and elsewhere. (That is when every US soldier in Southeast Asia used one ton of copper per years in bullets and other copper-based weapons.) That started the switch to aluminum.
There are good statistics for recycling available for each metal. (Or at least there used to be.) So you’re right — and each source and usage has to be projected independently to get a good final figure.
look at some of the main exports from the u.s.a. to china, you will see recyclables going to china for recycling. fish and chicken going to china for processing. its endless.
the mess bill clinton made simply can’t be reversed under current conditions.
well how can this be, america has been facing deflation at the same time as inflation.
its easy to understand, free trade is deflationary to wages, yet its massively inflationary to prices.
“What this strategy ignores is that by sweetening the pot for investors on Wall Street and in Silicon Valley, Washington is turning to the very same people who created the problem in the first place.”
actually every country on earth has a financial parasite problem. but if you keep the boot on them, a country can thrive(see the new deal and Gatt), remove that boot and the financial parasites will strangle your country to death.
that is exactly what bill clinton did when he gutted the new deal and Gatt.
china has a industrial policy, that policy is simply to make everything it can which produces robust supply chains. its what america did at one time till bill clinton came along.
no targeted industrial policy will work in a large country like the U.S.A., a small country, sure. but a large one needs robust supply chains that cover a continent. see china and russia, thats why they make everything.
and they do it behind the wall of protectionism.
Copper is an excellent example of a metal where doom stories about shortages almost never come true, for precisely the reasons you set out. Partly there are substitutes for most of its uses (aluminium in power cables, PVC in plumbing), but also the incentive for recycling – and theft. Back during the last peak in copper prices on several cases I witnessed the aftermath of power outages caused by local dealers realising they could access copper in power transformers simply by punching holes in the base to let the insulating liquid drain out, causing a short. In one cases, this caused a blackout in a town of 10,000 people.
Copper recycling can be very problematic though – one of my early jobs involved inspecting the aftermath of illegal encampments by Irish gypsies in the UK. They were in the habit of burning off the insulation of stolen cable to get at the copper. But copper when burned in the proximity of chlorine (as in PVC) is a catalyst for the generation of multiple organochlorines – specifically dioxins and furens. Due to the cost of testing (at the time, £1000 per sample), we rarely found out just what was in the residue, but there is little doubt that there were terrifying amounts of dioxins created in these localities. Older copper furnaces often had dioxin levels in the soil that would dwarf nearly any other potential source.
I appreciate the environmental aspects you mentioned.
I’ll add to that list of problems:
People that have one foot in this country and one foot on another country do not care in the same way.
The South Africans called people with one foot in Britain or the Netherlands and one on the Cape soutpiel: salt prick!
(ironically, I think the midpoint is over the Sahara, so sand prick would be better. But you get the haline thalassocratic drift…)
As for China…
What are they waiting for? America and associates to one day get over ideas about a “yellow peril” in some form or the other?
The IEA resource and ownership charts are based on S&P global and Wood McKenzie… recalling my superalloys employment days, Russia and Cuba were huge sources of nickel. This is from Wikipedia Geography of Cuba page:
Nickel mining and smelting in both Russia and Cuba are mature industries. If a country is sanctioned, we pretend it’s resources do not exist. I’d expect we would find other critical mineral resources exist in abundance in sanctioned countries. China and Russia have access to what they need, US and EU do not.
I suspect the USA is led by men and women who are advised by well credentialed economic and financial advisors.
But as a group they have never smelled cutting oil, used a soldering iron or are familiar with tools or industrial production.
It is a battle of “those who work with their heads” vs “those who work with their heads AND hands” in the Russians and Chinese.
China, as a ratifier of the Genocide Convention, should say that its sanctions against the U.S. are to prevent it from continuing to commit genocide in Palestine.
Just a little late. Genocide in Palestine is a done deal and now that Israel/USA control Syria, the genocide will continue even more effectively. Though we are the “bad guys” we are still quite good at some things. Be a proud American! /s
America was briefly a friend of the Mujahideen, and still that trans Afghan pipeline isn’t complete is it and nor will the trans Syria gas pipeline from Qatar ever be built.
Fear not Israel will find soldiering for America to do, like regime changing Saudi.
Also add industrial diamonds, both as an input and use as a tool for industry.
China pumps those out like candy
As I read about the mechanics of these things, the whole chain of what’s required is long and involved
Look at the chips act. Just the buildings are taking a lot longer and more expensive than planned. Do we make the equipment that goes in it? Nope
Do we have the thousands of trained engineers to run it, nope. Do we have the raw materials or refining capacity domestically, nope.
Could we, sure in a decade or 2 if we actually planned for it, but I don’t see it.
That as an analogy for the materials discussed, plus hundreds of others.
The US is so far behind the curve.
Tim Cook talking in China said that the US didn’t have enough of the right engineers to fill the room he was in vs China could fill a few soccer stadiums.
He was talking about why apple is in China, not because of lowest cost but because of the advanced manufacturing which no one else has.
We won’t catch up because we are behind the curve from the basics of manufacturing, the engineers, chemists, physicists, machinists, CNC.
There’s also the cultural attitude in certainly the UK and USA that engineering is a tier-2 career compared to finance, law, anything called management. This isn’t helped by film stereotypes where brainy women wear unattractive glasses and nerdy men have no hair or dress sense.
Good American engineers are often forced to choose between going in a corporate management track or the more technical track. The management track is typically more lucrative, offer more career growth and job jumping opportunities, and in certain fields, require less travel and on call time.
I mean, it’s pretty simple: engineering is hard, and you can make decent money. Finance is easy, and you can also make decent money. Most people don’t want to subject themselves to hard sciences because it is considerably more work. And American grammar school doesn’t exactly encourage rigor.
You are absolutely right, but it is more than that—a defense industrial base needs to be part of a larger industrial ecosystem (or costs and performance look like the F35), which doesn’t exist in the US and will not for a generation even if our schizophrenic political system actually sets its sights on rebuilding US manufacturing (which the financial rulers of the political system, e.g., Trump’s treasury secretary pick Scott Bessent, already deconstructed as better for profits).
Obama. Trump. Biden. Trump. ???. This is not a serious country for long-term investment.
Also, China is the dominant trade partner of almost every country in the world – its sanctions are less likely to be leaky than US sanctions.
I worked 11 years for a premier machine tool mfg here in the US as a service engineer across the US. I never saw any shop, large or small, without at least 1 professional Tool & Die pro. Most larger factories had least 2 full time, per shift. They are the heart of the labor pool in any factory making any hard metal parts or products.
And it takes a few years and lots of shop floor experience with multiple materials and cutting situations to be any good.
I think this tells us all we need to know about the state of mfg now and for the near future here in the US
https://www.bls.gov/oes/current/oes514111.htm
re: American manufacturing.
I have a box of Triscuit crackers (biscuits in the UK?) near me and it has boldly printed on it in white on a dark blue background:
“proudly grown & baked in the USA”
And in a much less prominent light blue text that could be missed on the dark blue background:
“with globally sourced oil and salt”
That this message is on a food product may indicate that Americans are trying to find manufacturing victories, no matter how small.
Anything that helps stop the U.S. War Machine ought to be applauded.
Ironic that some 50% of military spending is upon debt servicing. Maybe the incentives for military spending (congressional budget) are to provide the revenue/income to the financial services/preditory capital sector who then use this largess to inflate all asset classes, monopolize/employ our elected officials, profit from war….otherwise known as the Unicorn named ‘Peace Dividend’ yada yyada — maybe it is the same reason
Franklin Delano Roosevelt said
“We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Of course, finance is the new/old spear tip that other nations face when it is held to their necks. Instead of “Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore.”
it is more like
– , Keep your tired, your poor, your huddled masses shackled, the wretched refuse too – keep em’ to the grind stone so that they can extract your nations resources or will knee-cap ya if you don’t pay us our vig.
Yours truly
Organized Money
China certainly is a quicker learner than the Russians are in terms of dealing with the West. Maybe China’s hand is stronger than Russia’s regarding economic retaliation and that explains her much more proactive response to Western economic aggression plus the luxury of seeing what’s already happened to Russia, but the fact the Russians have allowed the US and Western nations steady escation spanning decades to the point that they can now directly bomb Russia and kill her people with total impunity suggests catastrophic policy failures in need of forceful correction that can’t be denied. China acting now hopefully helps her avoid a similar outcome latter.
Good call. Chinese culture is nearly the opposite of western wherein Russian culture is seated in the west. It’s hard to break free from hundreds, in fact thousands of years of cultural participation.
The Chinese got very lucky in one respect, the Cultural Revolution and international recognition of RoC over PRC meant that it really emerged into the international stage quite late, special economic zones in the 1980s and elsewhere in the 1990s. Which meant it already saw the downsides to debt driven industrialization post Volcker Shock and was in a better shape to deal with Tiannanmen Protests (in retrospect obviously a color revolution regime change attempt).
So China avoided a lot of mistakes by being late, studying what everybody else does, and try to chart the best course for itself. Now that it’s reaching parity or better with the Western hegemon in decline, it may have to feel its way through more interesting waters.
There was no gold or silver locally, but a fair amount of mom & pop tungsten mines sprung up in the aftermath of Pearl Harbor, mostly all closed down after Nagasaki. I know where half a dozen of them are.
If memory serves, 99% of tungsten mined now, is in China.
Good luck going to war without wolfram, Jack,
That’s one of the reasons the depleted uranium munitions were developed. U has similar properties to W (in munitions) and is available domestically.
Many geologists could point you to several tungsten deposits, having had WWII-era production. Where it occurs as scheelite, It is relatively low complexity to beneficiate. It’s specific gravity means you can hydraulically sort it. Because of it’s fluorescence, it could likely be sorted with “machine vision” consisting of CMOS imagers and air jets. Every time I get a mind to go and stake claims, I do some figuring on the economics of Tungsten concentrates from the USGS Reports, and I’m quickly discouraged.
Tungsten was worth a fortune in the WW1 era, but has only gone steadily down in price since then.
Don’t You Just Know It. Xi’s probably saying Ya ya, Hey Joe, You Belong to Me. Now, Killer Joe, he’s a Tossin’ and Turnin’ ’cause those minerals are So Rare. Don’t worry Joe, Everybody Loves a Loser.
Years have passed now through which a week has not passed during which China has not been directly threatened by the United States and assorted US allies. I do not understand why this should be so, but the Chinese understand the threats as such. The result has been that Chinese economic or development planning is always done with the problem in mind. This has meant very high levels of investment, especially in infrastructure and research and development in advanced technologies.
As for strategic materials, China has not just focused on exploring and securing sources, but on advanced processing and exploratory used such as in space development.
Excellent, informative, and timely article. The US military has had to lower standards for recruiting and apparently still have trouble meeting recruitment goals. Since the US is reliant on tech and air power, shortages of key materials, as Mr. Gallagher concludes, could curtail the US ability to produce weapons and components. We see already that Russia has shown missile tech superiority and superior electronic warfare technology. The tide of power relations is slowly turning.
However, in the very short term the MI6/CIA/Mossad crowd seems to be able to come up with sufficient weaponry to supply proxy forces to topple the Assad govt. and Damascus has fallen. The Israelis appear to have plenty of weaponry, at the moment at least, and shipments from US/UK continue apace.
It will be very interesting to see how this plays out, and how Russia will react. Will Russia be forced to abandon its bases in Syria? The situation looks more and more volatile. The context provided by this article and the ability of the US/UK to supply proxies and vassals with the latest weaponry may well be in doubt. In the meantime, however, Lebanon, Syria, Palestine, Yemen, Iran, are in danger.
As for the United States, what is little noticed or discussed is that manufacturing productivity growth has simply stopped. Manufacturing growth in the US was taken as a given from the 1930s on, about 2 percent a year over the decades. Now, labor productivity growth in manufacturing has stopped and total factor productivity growth in manufacturing has stopped.
https://fred.stlouisfed.org/graph/?g=m2mB
January 30, 2018
Manufacturing Productivity, * 1988-2023
* Output per hour of all persons
(Indexed to 1988)
https://fred.stlouisfed.org/graph/?g=1C2ry
January 30, 2018
Manufacturing Multifactor Productivity, * 1988-2023
* Real value-added output divided by combined inputs.
(Indexed to 1988)
and that despite growth of the installation rate of industrial robots over the same period.
https://ifr.org/ifr-press-releases/news/u.s-companies-invest-heavily-in-robots
I guess boosters for robotic automation as the solution to productivity to secure VC funds have jumped to AI.
“despite growth of the installation rate of industrial robots over the same period.”
I do not understand the evident problem, but US manufacturing production robot installations relative to employee counts have not effectively increased. The data are correct, but what is wrong?
I do not know how many minerals are stockpiled.
US began unilateral expensive but profitable disarmament decades ago, maybe when they “leased” that huge war department aircraft plant in Ft Worth to Lockheed.
F-35, and Ford class carriers are profit machines not armaments!
I was in DoD systems acquisition from1985. To push “competition” in followon production and during sustainment we tried to get open data rights and compete “reprocurement with detailed product specs.
The rights only enriched the company lawyers and the product specs proved a couple bridges too far expensive, poor quality, especially as tech moved on.
So, the primes kept monopoly power over the pentagon monopsony!
Gallium is important! The F-35 lusts for new radars, to add to its power deficit, that need Gallium Nitride substrates. China and Russia were both ahead here when I left about 5 years ago.
The challenge will be replacing Presidents drawdown authority stocks, without a lot of redesign to overcome things no longer made.
Typo “rare hearts umbrella” :-) for “rare earths umbrella” in Para 6.
Access to critical minerals isn’t the only problem. We don’t have capacity for churning out artillery shells, either. High-tech wars may be short, but Ukraine shows that wars waged with tanks and infantry aren’t a thing of the past. We are unable to keep them in supply (and the Europeans may not be much better). The focus of military procurement is on new weapons, the more expensive the better, and their long project timeline means that, when (if?!) completed, they may not fit current needs, plus may be obsolete.
Institutional factors matter. No junior officer makes a positive mark fighting to increase the amount of bullets in the warehouse, nor do lobbyists make big bucks from that.
With regard to:
I recent read an FT article on Intel which covered lays bare this “dilemma” of American industry:
What Pat Gelsinger’s exit means for Intel and the US Chips Act
https://www.ft.com/content/b9f847c6-eeb2-40f1-96fa-6ac6e647a7bf
Basically, making things is not as profitable as not making things. Unfortunately, the US government has decided that being able to make things is important:
The funny thing is that despite the recent release of the newest CPUs to the PC end of the market being a bit of a bust, the newest server center hardware has gotten very good reviews.
PC CPU:
Intel Core Ultra 9 285K Review: Intel Throws a Lateral with Arrow Lake https://www.tomshardware.com/pc-components/cpus/intel-core-ultra-9-285k-cpu-review
Server CPUs:
Intel Launches 144-core ‘Sierra Forrest’ Xeon 6 CPUs, Granite Rapids Follows in Q3
https://www.tomshardware.com/pc-components/cpus/intel-launches-144-core-sierra-forrest-xeon-6-cpus-granite-rapids-follows-in-q3
Here’s Wendell at Level1Techs going through the Xeon 6 launch:
Intel’s Best CPU in 10 years — What’s Next is Just as Important https://www.youtube.com/watch?v=_uKxEkgGu9g
I hope that Wall St does not get it’s way. Sure, you can be most profitable strip mining a company into the ground, but anybody can now see that actual manufacturing is where the real innovation happens, not Wall St financial manipulations.
The Chinese are kneecapping the competition via export controls:
The World’s Biggest Arms Exporters
(I’m thinking these rankings will look much different in 2030)
US 41.7%
France 10.9%
Russia 10.5%
China 5.8%
Germany 5.6%
Italy 4.3%
UK 3.7%
Spain 2.7%
https://www.statista.com/chart/18417/global-weapons-exports/
And there’s this:
Cheap Chinese Arms
are doing what cheap Chinese EVs did
Having demonstrated its mastery of mass automobile manufacturing, China is now mass manufacturing defensive weapons. Fully automated factories churn out 1,000 missiles a day because their supply chains are tightly coupled and use IoT, cloud computing, 5G and AI to continually raise productivity and lower downtime. And pass the savings onto customers!
https://herecomeschina.substack.com/p/cheap-chinese-arms
Everyone but Russia and China are paying much higher input costs– Europe for energy, US for rare earths– so already Russia and China have an advantage with production costs. And the latest Russian products are “battle-tested,” proven in field conditions, so they have going for them.
How very useful if you’re the leader of a Global South country that just kicked out the French/Americans/Canadians/Australians and re-nationalized the mines. Or just sit at a strategic position in the world and enjoy shooting at ships supporting genocide.
Now TEMU will drop ship some just in time missiles to you at a fantastic price. So you can shoot more and pay less.
All we need is for the financial industry to assert the USA military should go “fabless” because the USA can buy functional weapons at a better price point overseas.
Maybe some think tanks are spinning this up right now.
If the USA believes it excels in strategic planning and public relations (aka “promoting democracy”) then to borrow a business buzz phrase, the military should “focus on its core competencies” and outsource military manufacturing to lower cost providers.
What IS the US going to make if not weapons for war? Personally, I will be glad if the US can’t produce so many weapons of war – let alone export them.
Dominant nations become fat, lazy, and stupid. Rising nations tend to be lean, industrious, and smart. (This also applies to organizations and individuals.) When China become dominant, it will succumb to the same deterioration currently occurring in the U.S. Until someone, or some AI, figures out how to prevent and repair behavioral entropy, this cycle will continue indefinitely, punctuated by gratuitous conflicts.
As the shameless junior mining promoters (Perpetua, Military metals, etc.) will make very clear on the back of this news, it is not from a lack of a domestic mineral endowment. All this news will serve to do is fuel more financial engineering. You can almost hear the thumbs frantically beating on iphones in the private clubs near Vancouver and Perth, trying to turn the promise of Gov’t subsidies into higher share prices, M&A, exotic cars, and big cigars,
Meanwhile, little malnourished bodies will continue to wrestle the metal from the ground, in dark corners of the global south. Metal wrought into shells and tank treads to churn their distant peers into the soil elsewhere. Truly a waste.