As long as China's relationship to the developed world is built on competition, it will make little difference whether it maintains control over these valuable resources
Japanese scientists say they have discovered 100 billion tons of rare earth minerals, about 1,000 times the rest of the known global supply, on the Pacific floor. The minerals, of which China is by far the world's dominant producer, are crucial for high tech consumer and military products, and thus for Japanese and U.S. security and economic well-being. China has used its near-monopoly on rare earth metals as a foreign policy tool against the more powerful Japanese and U.S. competitors, threatening, and at times executing, embargoes as a sort of ransom.
The discovery has led many observers, including the Wall Street Journal editorial board, to predict the end of China's exploitation of rare earths exploitation. The country's leadership, they argue, will have to acknowledge that it can no longer use its near-total control over the resource as a weapon against the U.S. and Japan:
Markets provide reliable sources because the price mechanism has incredible power: The higher prices caused by restricted access to rare earths are leading to new supplies, which will in turn bring prices down again. Once again, the main loser from China's statism is China itself.
The free market has indeed led us to a new and plentiful supply of rare earth minerals, but it has inconveniently placed them about 10,000 to 20,000 feet beneath the Pacific. "A mine like this takes five to seven years to start up," Franz Meyer, a mineralogist at the University of Aachen, told German newspaper Deutche Welle. "Underwater mining can take even longer to get going."