Latest Weapon in Japan-China Rare Earth Battle: Resource Nationalism

MetalMiner recently interviewed Dan McGroarty, principal of Carmot Strategic Group, an issues management firm in Washington, D.C., about what the China-Japan territorial dispute over the Diaoyu Islands has to do with strategic mineral resources.

McGroarty also founded of American Resources Policy Network, a think-tank devoted to identifying solutions to reduce America’s dependency on rare earths and other strategic minerals. (Catch up here on Part One of the interview.)

In this second part, the interview gets into what is known as “resource nationalism.”

MetalMiner: Do you think this dispute is about rising nationalism, and if so, how does it manifest itself? What does this dispute say about resource policies for each nation?

Dan McGroarty: This is evidence of resource nationalism, similar between one country and another. Japan has made their seabed claims – they are looking at themselves as a technologically advanced country needing access to minerals. Geologically, Japan itself does not have much of a resource profile, so their seabed and claims for these islands loom large. China may be driven to bring 300-500 million people into the middle class and they want to make sure they have access to vital resources. That serves as a benign reason China has asserted itself. Would Japan or China use this dispute as a weapon or lever?

The only recent evidence dates back to 2010 when it looked like China had a 30- to 40-day period where rare earth access stopped. Japan found itself without rare earths. I believe this once-a-decade transition in China may cause the country to feel compelled to show strength, continuity and the need to resort to nationalistic levers. Japan also remains in a political state where leadership is weak and in question. Domestic dynamics certainly motivate actions.

MM: There has been much discussion regarding China’s new naval capabilities, particularly since it has now placed its first aircraft carrier in service. Intelligence source Stratfor says, “As China’s navy continues to evolve, the response from surrounding countries may lead to just the opposite of what Beijing wishes — namely, to the formation of an oceanic great wall, one not designed to keep China’s enemies out, but rather to keep China locked in.” What do you make of that?

DM: China’s need to develop its own navy is a long-term entry into global maritime status, and just a single aircraft carrier isn’t much of anything. It’s not inexpensive and it would compete with other military claims. Is the leadership of China’s large land army ready to see funding devoted to growing a blue-water navy? China will have to get used to that over time. China is a global economic power that will likely want to protect its own interests in global commerce  — which is still conducted through global sea-lanes.

Part Three of the interview will get into what the United States can learn from the tussle in terms of a rare earth/strategic mineral policy perspective.

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