The other day US President Donald Trump said: “With a communist in charge? Look, you just go back a thousand years, it’s been done many times, a thousand years, it’s never worked once.”
He was talking about Zohran Mamdani, the leading candidate for New York City’s mayoral election on November 4, who says he is a democratic socialist, not a communist. Close enough.
As for the thousand years, he must be talking about King Cnut the Dane who was ruling England in 1025, and who does seem to have been a bit of a Kim Jong-il-style communist, having inherited the Danish crown from his father before invading England, and commanded the tides not to rise and all that, although 1,000 years ago Karl Marx was 823 years away from inventing communism.
Anyway, Trump had forgotten that the previous day he had signed a critical minerals deal with Australian Prime Minister Anthony Albanese to try to counter China’s dominance of their global supply.
Beijing’s export-licence requirements on seven rare earths galvanised the Trump administration into action. (AAP: Lukas Coch)
China’s capitalism 101 controls rare earths
To remind the president: China is both communist and working passably well, something he and the United States generally are being forced reluctantly to confront.
In fact, China is doing better than just working. Historian Adam Tooze pronounced on a podcast about the same time as Trump and Albanese were signing their deal that: “China isn’t just an analytical problem; it is the master key to understanding modernity. [It] is the biggest laboratory of organised modernisation there has ever been or ever will be …”
But then, is China actually communist?
Well, it’s ruled by the Communist Party and has been for 76 years, still with an official ideology of Marxism-Leninism “with Chinese characteristics”, which seems to mean that it’s a capitalist sort of communist country.
Indeed, China used capitalism 101 to get control of rare earths and critical minerals: that is the time-honoured tactic of loss leading, in which a business sells a product below cost to drive its competitors out of business and grab a monopoly.
The world’s principal rare-earths mine, Mountain Pass in California, was driven out of business by China in 2002, and while it reopened in 2015 with a price guarantee from the Obama administration, it was too late — its 70 per cent global market share had become China’s 70 per cent, which it still is.
In 2002, the US was busy invading Afghanistan and getting ready to invade Iraq and if America’s leaders at the time thought about China at all, they thought that it would never amount to much … because, you know, they are communist losers.
At that point America was still basking in the 1991 collapse of the Soviet Union, and Francis Fukuyama’s 1992 book, The End of History and the Last Man, which argued that the end of the Cold War marked the end of mankind’s ideological evolution and the final victory of Western liberal democracy as the enduring form of human government.
Communism doesn’t work was the general view, to which Trump apparently still cleaves.
Also, in 2002 China had just joined the World Trade Organization and embarked on the modernisation that Tooze describes as the biggest there has ever been or ever will be.
And now China is wiping the floor with America in just about every aspect of economic and industrial life.
A monument reads: “Home of rare earths welcomes you”, in China’s Inner Mongolia Autonomous Region. (Reuters: David Gray)
Trump missing a ‘Sputnik moment’
The 2002 closure of the Mountain Pass mine should have been a “Sputnik moment” for the United States, echoing the Soviet Union’s launch on October 4, 1957, of the first satellite, Sputnik 1, which produced a huge, panicked national effort to invest in science and scientific education, leading to the creation of NASA, landing Apollo 11 on the Moon in 1969 and, eventually, to the invention of the internet and artificial intelligence (AI).
There was a bit of a Sputnik moment on February 4 this year when China’s Ministry of Commerce announced new controls on exports of tungsten, tellurium, bismuth, molybdenum and indium.
China supplies 80 per cent of the world’s tungsten and bismuth, 67 per cent of tellurium and indium and 42 per cent of molybdenum.
By the way, this was seven years after China’s own Sputnik moment, when the US banned semiconductor exports to China and set China on a new and very focused economic course.
The logic for Beijing was simple: if the US could ban shipments of semiconductors, it might also ban chemical products, auto parts, or any number of key inputs. Becoming self-sufficient in everything became a matter of national security.
Chinese banks were told to stop lending to real estate and instead to lend hand over fist to anyone adding industrial capacity (note that the government didn’t build the capacity itself, as a truly communist nation would — it was socialism with Chinese characteristics).
On March 20, Trump issued an executive order with “Immediate Measures to Increase American Mineral Production”, which was a long way short of what Dwight D Eisenhower did in 1957 in response to Sputnik 1.
On April 4, Beijing doubled down, adding export-licence requirements on seven rare earths — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — and made it clear these minerals would not be available for military applications.
That galvanised the Trump administration into action and negotiations for a deal to get hold of Australian rare earths were urgently commenced.
But there should have been some more Sputnik moments for the US this year, starting with the Chinese AI company, DeepSeek, unveiling its models on January 22 this year, at a fraction of the cost of American ones.
Everyone thought China was running a distant second in the AI race, but that turned out to be wrong.
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Chinese robots at the shops
Then more recently, Chinese mega tech company Alibaba announced it had developed a pooling system called Aegaeon that reduced by 82 per cent the number of Nvidia GPUs (graphics processing units) needed to do AI.
And in the past few days here in Australia, there has been a small burst of publicity about robots in shopping centres prompted by a company called Bellbots, including an appearance on Kyle and Jackie O, and a story on Channel 9 news filmed with a robot at the new Silverdale mall in Penrith.
I rang up Andrew Bell, 36, founder, owner and CEO of Bellbots. At 17 he joined the army and a year later was sent to Iraq where, he says, he was exposed to a lot of tech (as well as bullets presumably).
His business idea is to put robots into shopping centres where he would rent a space to park and charge their batteries, and then have the machines wander around the centre (they are 1.5 metres tall, walk on two legs, talk, look a bit human, with a head but not a face, and are remarkably stable).
There will be two revenue streams as Bell sees it: advertising, with the robot voicing ads paid for by retailers to spruik their stores, and shoppers could also use an app to rent the robot to carry their shopping to the car (or discuss the meaning of life over a coffee?).
A video of the humanoid robots fighting in the China Media Group World Robot Competition in May. (Reuters: CCTV)
At least that’s the plan. And where is he getting the robots from? China, and a company called Unitree.
Unitree launched its new generation of humanoid robots last week, called H2, with a video of it dancing to loud heavy metal music. Rudolph Nureyev it is not, but that the thing dances at all is progress.
Bell has bought one of Unitree’s G1 machines, not the all-dancing H2 model, and has another nine on standby if he can get a deal with a shopping centre. He wouldn’t tell me what he paid for it, but I’d guess it’s about $20,000.
My son’s reaction was: “Oh, these things are going to end up in the river!”, which is probably true after what happened to e-bikes, so there’s an insurance dimension to be worked out.
Bell says he would have liked to use Tesla’s Optimus robot, which he loves the look of, but when he contacted them, they weren’t interested and blew him off.
Unitree in China, on the other hand, was all over him: “They were open to anything we wanted to suggest, really on the ball.”
If Chinese robots wandering around a shopping centre in Penrith spouting ads and carrying shopping to the car park isn’t a Sputnik moment, and proof that communism works, I don’t know what is.
Alan Kohler is finance presenter and columnist on ABC News and he also writes for Intelligent Investor.
