What factors are going to determine the global economic balance of the future? How important is technological development going to be in this “competition”? Today, technology is spoken of as a fundamental element in guaranteeing not only economic but also social progress, and, albeit with differing levels of investment, every country around the world is pushing in this direction.
In Europe, automation, robotics, cloud, improving skill sets are the key concept. All national industrial plans include expanding technological potency and improving training of workers as essential starting points. All good so far, maybe we’re forgetting two factors that concern the global economy and national investment strategy which are at the very heart of technological development: sourcing raw materials and, at the same time, creating and managing new markets. These are two aspects which will determine the future of all global economies. Today there is one country laying down the foundations to become the real superpower upon which all others will depend: China.
This country is the biggest producer of “rare earth” elements, the 17 chemical elements which are the key to further technological development, whether that be in aerospace, nuclear, super-conductors, optical fibre cables, computers, mobile phones and so on.
China owns the biggest reserves (over 30%) and has the greatest rates of extraction and refining, along with the enormous costs that go with such a massive undertaking.
Despite their name, these elements are not that rare, the problem is in their separation from rock and their subsequent refining, processes which require numerous chemical phases incurring costs and substantial environmental risk, including that of radio-activity.
Between the end of the 90s and 2010, China was in control of around 97% of global rare earth element production; today other nations have returned to investment in mining and China’s percentage has dropped to around 80% ( 2017 saw China produce 105.000 tonnes of rare earth; Australia and Russia, second and third producers account for 20.000 tonnes and 3.000 tonnes respectively). This data is worth thinking about, if, one day, China were to decide to stop the supply of these raw materials, the entire aerospace, military and electronics production of the industrialized world would be brought to its knees.
In addition to this, it is also necessary to consider the long-sighted vision the Chinese are adopting in “purchasing” another continent rich with raw materials: Africa. Since 2009, China has been the main trading partner with Africa. Over the last decade, China has invested over $125bn, with the clear and openly stated goal of helping its own economic position. As well as creating infrastructure, financing projects for local economic development, China has even cancelled debts some African countries had toward them and, in so doing, obtained in return control of immense raw material mining resources. Many analysts are convinced that China’s
long-term goal is to shift all production centres to Africa in order to save on the costs of raw material imports and on costs relating to labour and “pollution management”. This can even function in terms of creating a new market for certain technology that would be considered obsolete elsewhere. Despite these warning signs, America, more concerned with setting up import duties to limit the flow of goods and Europe, which continues to consider Africa as a source of problems rather than opportunity, are not getting the message. There is plenty more to write on this subject, I certainly hope that decision makers at the highest level understand that the future of the global economy will not be determined by laws focusing on short term investment or migrational population flows, but rather take up a
macro-economic view which looks well beyond their own borders.