In the field of smart manufacturing in the US economy, Apple needs to use rare earth elements in speakers, cameras and mobile phone vibration functions. Raytheon, Lockheed Martin, and BAE systems that produce missile guidance systems and sensors, precision missiles and radar-related products all need rare earth metals. This means that rare earths are equivalent to a major lifeblood of America’s dominant industries. However, the US economy has been trapped by rare earth resources for many years and cannot be self-sufficient.
A new development in the matter is that, according to a report by Reuters on October 1, an order signed by the President of the United States on September 30 local time instructed the U.S. Department of the Interior to accelerate mine development. Reuters stated that the “rare earth administrative order” may result in tariffs, quotas or other possible import restrictions. It is worth noting that the text of the US “Rare Earth Administrative Order” shows that 80% of the total imports of rare earth compounds and metals in the United States last year came from China.
There are approximately 110 million tons of rare earth oxides in the world, of which deposits are located in China, Brazil, Russia, the United States, India, and Australia. A previous 862-page report by the United States showed that the United States relied on imports of major minerals such as platinum, manganese and rare earth metals from several countries such as China and Russia. Among them, 20 important resources mainly depend on Chinese supply, including almost all rare earth metals used in high-end electronic products.
Data show that China’s rare earth mining volume in 2019 is about 132,000 tons, about 62.86% of the global total rare earth mining volume, ranking first in the world. In 2019, the total amount of rare earth mined in the United States was only about 26,000 tons. Regarding rare earths, former U.S. Secretary of the Interior Ryan Sink once pointed out that our (U.S.) economy is very fragile” because we rely heavily on imports from China.
In fact, in the past two years, the US economy has been trying to increase the cooperation with Australian companies to obtain more rare earth resource supply chains and gain more rare earth purification and separation capabilities. However, Russian media RT analyzed earlier that this was a fat man with a swollen face. American scholars and scientific experts often mentioned that “an important weakness of the US economy lies in the hands of some countries. This is rare earth.” Russian media RT recently quoted economist Alessandro Bruno to analyze that rare earths are vital to the US economy. Bank of America analysts pointed out that China’s exploration and mining of rare earth raw materials has a history of more than 100 years.
All this shows that rare earths are a pain point of the US economy and advantageous industries. At the same time, the U.S. economy has another pain point. This is the continuously exploding debt and the selling tide of U.S. debt, making it impossible to effectively hedge the U.S. deficit that continues to soar in 2020. According to data from the US Federal Debt Real Time Clock website, as of October 1, the total US federal debt has exceeded 26.8 trillion US dollars, which is 99 times that of 1958. According to a report released by the Federal Reserve in August, it is estimated that by 2028, the United States The total federal debt will reach 48 trillion, more than 250% of the US GDP, currently 136.8%.
According to the International Capital Flow Report released by the U.S. Department of the Treasury on September 17 (the official data report on U.S. bond holdings will be delayed by two months), as of July, the global central bank has been in the 22nd month of the past 23 months. The net reduction in US debt holdings resulted in a total sales of nearly 998.5 billion yuan, which was also a record level of US debt dumped by global central banks.
Among them, in the 23 months ending in July, China has continuously reduced its holdings of 144.7 billion (nearly 150 billion) US debt.
Another development of the matter is that the US financial website Zerohedge quoted relevant media and experts to analyze that with the surge in the US federal deficit and increased default risk and other factors, under normal circumstances, China may gradually sell 20% of US Treasury bonds. Increase, it is possible to clear US debt.
In fact, monetary authorities that are almost empty of U.S. debt have appeared since 2018. For example, Russia’s current share of US Treasury bonds is only about 5% of the previous highest point, and Russia has sold about 95% of US bonds. And it has not appeared in the list of the top 30 overseas holders of U.S. debt for several months.
The US media CNBC analyzed a few weeks ago that once big buyers suddenly sell U.S. debt sharply, the impact on the U.S. economy may be “nuclear”. A view that billionaire investor Jim Rogers has long maintained is that Under the pressure of the huge debt problem, the United States is facing a crisis that is more serious than the 2008 financial tsunami. Affected by the US debt and the high valuation of US stocks, US dollar assets may become a complete threat. The U.S. economy is already in crises despite the high amount of U.S. debt, and the world’s major buyers have an initiative in the sustainability of the U.S. debt economy.
This also means that U.S. debt, like the rare earth mentioned earlier in this article, has become the two emerging pain points of the U.S. economy.