【正文】 China39。s Rare Earth Elements Industry: What Can the West Learn?By Cindy HurstCorporate Author:INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY WASHINGTON DCPersonal Author(s):Hurst, CindyReport Date:MAR 2010Pagination or Media Count:43Institute for the Analysis of Global Security (IAGS). Army Foreign Military Studies Office, 731 McClellan Avenue, Fort Leavenworth, KS, 66027Cindy Hurst is an analyst for the . Army’s Foreign Military Studies Office, Fort Leavenworth, KSIntroductionChina controls approximately 97 percent of the world39。s rare earth element market. These elements, which are not widely known because they are so low on the production chain, are critical to hundreds of high tech applications, many of which define our modern way of life. Without rare earth elements, much of the world39。s modern technology would be vastly different and many applications would not be possible. For one thing, we would not have the advantage of smaller sized technology, such as the cell phone and laptop puter, without the use of rare earth elements. Rare earth elements are also essential for the defense industry and are found in cruise missiles, precision guided munitions, radar systems and reactive armor. They are also key to the emergence of green technology such as the new generation of wind powered turbines and plugin hybrid vehicles, as well as to oil refineries, where they act as a catalyst. (Note: for more indepth information on the specific uses of rare earth elements, refer to Appendix A).Over the past few years, China has e under increasing scrutiny and criticism over its monopoly of the rare earth industry and for gradually reducing export quotas of these resources. However, China is faced with its own internal issues that, if not addressed, could soon stress the country39。s rare earth industry.This paper is designed to give the reader a better understanding of what rare earth elements are and their importance to society in general and to . defense and energy policy in particular. It will also explore the history of rare earth elements and China39。s current monopoly of the industry, including possible repercussions and strategic implications if rare earth elements supply were to be disrupted.The Issues China FacesAccording to Zhao Shuanglian, Vice Chairman of Inner Mongolia’s Autonomous Regions, “Rare earth is a unique treasure, and it is also Inner Mongolia’s primary strategic resource.”While China possesses approximately 57 percent of the world’s reserves of rare earth elements, the industry within China is plagued with disorderly development and poor management practices. The Chinese government fears that if the current poor mining practices and lack of regulation continue, China will “bee a rareearth poor country, or even a country without rare earth elements.”O(jiān)ther issues facing China’s rare earth industry are smuggling and illegal mining activities, environmental damage due to poor mining practice, and the growing challenge of ensuring its own domestic needs of rare earth.SmugglingAccording to China Business News, due to the annual increased demand for rare earth elements, many buyers are resorting to smuggling rare earths out of China. In 2008, approximately 20,000 tons of rare earth were reportedly smuggled from the country. Meanwhile, during that same year, according to official customs statistics, China exported 39,500 tons of rare earth oxide. This means that smuggling accounted for onethird of the total volume of rare earths leaving China.One aim of China’s “RareEarth Industry Development Plan of 20092015” is to try to curb some of the smuggling by introducing regulations and policies to punish the smugglers. Smuggling is potentially detrimental to China’s rare earth industry because it keeps prices low and depletes resources quicker. Smuggling also indicates a severe lack of control over the industry and can lead to even greater repercussions such as more damage to the environment. Regulations on safe mining practice are nearly impossible to enforce in this type of environment. As it is, because of poor management practices and the large scale of the industry, China already has difficulty in enforcing regulations to improve safety and environmental measures in its rare earth industry.Severe environmental damageA major concern surrounding China’s practice of mining rare earth elements is the negative impact it has to the environment due to lax mining practices. There are a number of potential environmental implications to mining rare earth elements if not done properly. Unfortunately, because of the revenue potential, many rare earth mines have been operating illegally, with no regulation, causing severe environmental hazards, which exacerbates the problem.In 2005, Xu Guangxian wrote that thorium was a source of radioactive contamination in the Baotou area and the Yellow River. According to a local source, who asked not to be identified, “In the Yellow River, in