China’s rare earth threat is getting real
As per the Simpsons, nothing happened on Tiananmen Square in Beijing on June 4 this year. But nearby on Yuetan Street, an important meeting was held at the headquarters of the powerful government department known as the National Development and Reform Commission (NDRC).
The aim of the meeting was — according to Xinhua’s Chinese report — how to promote “the high-quality development of the rare earth industry in China.” But nationalistic rag Global Times better captures the real goal: China to make full use of rare-earth card in containing U.S.
In response, the U.S. Commerce Department vowed “unprecedented action to ensure that the United States will not be cut off from these vital materials.”
- “Rare earth elements are used in a wide range of consumer products, from iPhones to electric car motors, as well as military jet engines, satellites and lasers,” explains Reuters.
- “China supplied 80 percent of the rare earths imported by the U.S. from 2014 to 2017,” and has “at least 85 percent of the world’s capacity to process rare earth ores into material manufacturers can use.”
- “It would take years to build enough processing plants to match China’s processing capacity of 220,000 tonnes — which is five times the combined capacity of the rest of the world,” according to Reuters.
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Is a rare earth cutoff a serious threat? Perhaps not. Rare earth elements are not actually rare, just troublesome to process, so some argue that any disruption to their supply would just be a blip. See for example:
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Why China’s rare earths threat is no game changer in the trade war / CNBC
“The U.S. is not a big maker of technology products, so cutting off rare earths exports to American manufacturers would have a limited impact.” - Don’t panic about rare earth elements / Scientific American
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Why China’s rare earths threat is no game changer in the trade war / CNBC
- Pro-mining American groups are delighted: Time to capitalize on rare earth abundance in the United States argue a couple of conservative Washington think tankers.
- Australian miners are also happy: The managing director of Arafura Resources sees opportunities for his company, which mines rare earths — see this interview on YouTube.
- Further reporting: Rare earths battle looms as U.S. aims to counter China export threat / Bloomberg (porous paywall); US moves to reduce reliance on Chinese rare earths exports after Beijing threatens to cut supplies / SCMP
We have reached a stage of mutual hostility between the U.S. and China in which it’s difficult to say what exactly the rare earth threat is retaliation for. Huawei? Tariffs? Trump tweets? Mike Pompeo’s remarks? All these, and a thousand other irritants, are part of the same toxic stew.
Other trade war news
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As trade war rages, U.S. lawmakers seek new limits on Chinese scholars / Reuters
“Some U.S. lawmakers are trying to pass legislation that would make it harder for Chinese students and scholars to enter the United States, citing security concerns as a trade war rages between Washington and Beijing.” -
U.S. denies GM tariff relief request for China-made Buick SUV / Reuters
“The United States has rejected separate requests from General Motors Co and Chinese-owned Volvo Cars for an exemption to a 25% U.S. tariff on their Chinese-made sport utility vehicle models.” -
TSMC expects short-term impact from U.S. ban on China’s Huawei / Reuters
“TSMC previously said shipments to its main client Huawei were not affected by U.S. action aimed at curbing the telecom equipment maker’s access to American technology, and that it would continue to be a supplier to Huawei.” -
Despite tariffs, hotel operators double down on China expansion and eye Vietnam / CNBC
“Large hotel operators Marriott, Hilton and Hyatt have been aggressively expanding across China in 2019.” - Apple CEO Cook says he doesn’t see China targeting Apple in U.S.-China trade dispute / Reuters
China’s economy as the trade war deepens
