FacebookTwitterRedditEmail

China’s Rare Earth Trade Card

Beijing.

The United States sees the trade dispute it has with China as one of many. It’s been down this road before, with Japan, Canada, Mexico and the European Union.

China views it differently. In Beijing the trade issue is seen as a threat to its further development and a possible cause of instability. The compact between the party and the people, growth without political reform, could be damaged.

So, when the phrase, “don’t say we didn’t warn you” was used by state media last month it confirmed the gravity with which the situation is viewed from Beijing. This was not a throw-away line, though on the surface it seemed quite mild. That is until you realize the significance of it.

The six-word phrase is associated with China going to war with India in 1962 and Vietnam in 1979. It could not have been used without the highest official clearance.  Beijing considers this trade dispute as a clear and present danger.

It must be stressed that war is not likely in the short term between China and the US, and the Thucydides trap, where an established power is challenged by an emerging power, is not pre-ordained. Besides, of all the causes to rally to the flag and take to the trenches, rare earths, hardly inspire thoughts of daring-do and bravery. Thousands will not take to the streets in either Beijing or Washington under banners in passionate defence of say, Lanthanum or Dysprosium. These minerals and others are, however, vital for modern lifestyles and technology and ironically, are not that rare.

The methods use to extract them are heavily polluting. It’s a dirty business. Processing one ton of rare earths produces 2,000 tons of toxic waste.

Consequently, few places mine them though they can be found in many countries.

These critical minerals, a group of 17 elements, touch almost every aspect of modern life, including renewable energy technology, spacecraft, defence, oil refinery, electronics, and the glass industry are as vital an ingredient to the global economy as oil is.

This makes China the new Saudi Arabia. It sits on close to 40 percent of rare earth resources and its 120,000 tons of  annual production accounts for about 80 percent of global supply.  Australia, the world’s second largest supplier, produced 20,000 metric tons last year.

To reinforce the point China’s president Xi Jinping, broke into his regular scheduling and visited a rare earth facility last month in Jiangxi province to hammer home the point.

China has options, none of them enticing. It could limit supply and move prices as Saudi Arabia and OPEC have done with oil. The backlash could spur a drive to increase rare earth mining in other countries.

The US imports 80 percent of its rare earth needs from China. But it accounts for just 4 percent of China’s rare earth shipments, totaling around $160 million in 2018. No other single commodity gives China such an advantage. Vital to the US but, in terms of quantity, of minor significance for China.

Beijing sets a quota for rare earth production twice a year. In the first half of 2019, the cap was placed at 60,000 tons – up from 45,000 the preceding half. If it is to reduce exports of rare earths, it will lower this quota. Quotas for the remainder of the year will be released in June and will be a key indicator of China’s intentions over the coming years.

One other factor comes into play. China’s “monopoly” on rare earths is illusory. Environmental regulations, more often ignored than followed, allows extraction and refinement to be cheaper and easier than other countries. But Beijing is trying to clean up its act. Domestic companies and illegal extractors have been sanctioned recently amid increasing concern about the environment.

China is also one of the leading consumers of rare earths and by 2025, the country could be a net importer of them. Driving up prices today could backfire tomorrow.

Besides, the mining of rare earths outside of China is also growing. Non-Chinese production has grown to about 29 percent of the global output from just 3 percent in 2009.

Like the Saudis, China faces a dilemma. Cut off supplies or reduce exports and markets could be threatened. Do nothing and you will seem to be a pushover. June is a sensitive time in China and in October the party will celebrate 70 years in power. Rare earths are the strongest card in Beijing’s trade hand. Will it fold or hold?

 

More articles by:

Tom Clifford is a freelance journalist and can be reached at: cliffordtomsan@hotmail.com.

bernie-the-sandernistas-cover-344x550
April 09, 2020
John Davis
Freedom Virus
Vincent Emanuele
The New Normal: Cascading and Multilayered Crises
Jeffrey St. Clair
Bernie’s Last Tape
John O'Kane
Remove the Boomer Virus and What Virus Remains?
Kevin Bixby – Daryl T. Smith
The Border Wall Risks Us All
Nick Pemberton
Could COVID-19 Count Fox News Among Its Victims?
Howard Lisnoff
American Exceptionalism in the Face of Covid-19
Charles Pierson
We Are Living (And Dying) in Poe’s “Masque of the Red Death”
Sam Husseini
Sanders Suspends: What Happened? What Now?
Binoy Kampmark
Banal Terrors: Pandemics and the Ordinary Business of War
Ted Rall
Why We Need a New Progressive Party and How We Can Create It
Walden Bello
Martin Khor: the Making of a Global Activist
Ariel Dorfman
COVID-19 and the Lessons of Life in Exile
Merriam Ansara
John Lennon in Quarantine: a Letter From Havana
George Wuerthner
Politics and Corruption at Grand Canyon
Eugene Schulman
Lost in the Pandemic: the Forever Wars
Dean Baker
Basic Economics for Economic Columnists: a Depression is a Process, Not an Event
George Ochenski
The Dishonest Mr. Daines
Mike Ferner
Love in a Dangerous Time
Brian Horejsi
Beware Government Secrecy in Times of Pandemic
Sam Pizzigati
No Fennel in the Sausage, No $600 for the Jobless
Jason Christensen – John Carter
Conservation Groups Oppose the Nature Conservancy’s Cattle Grazing Development Project on the Border of Canyonlands National Park
April 08, 2020
Melvin Goodman
The Impact of COVID-19 on the Body Politic
Eve Ottenberg
Amid Plague, Sanctions are Genocide
Vijay Prashad, Du Xiaojun – Weiyan Zhu
How China Learned About SARS-CoV-2 in the Weeks Before the Global Pandemic
Bill Quigley
Seven Disturbing Facts About COVID-19 in Louisiana
Joyce Nelson
BlackRock Takes Command
Geoff Dutton
Coronavirus as Metaphor: It’s Not Peanuts
Richard Moser
From Strike Wave to General Strike
Gary Leupp
Could COVID-19 Kill Capitalism?
Thomas Klikauer – Nadine Campbell
Corona, Capital and Class in Germany
Tom Crofton
Aspirational vs Pragmatic: Why My Radicalness is Getting More Radical
Steve Kelly
Montana Ballot Access Decision Suppresses Green Party Voters
Jacob Hornberger
Muhammad Ali’s Fight Against the Pentagon
Phil Mattera
The Rap Sheets of the Big Ventilator Producers
Manuel García, Jr.
Why Remdesivir and Hydroxychloroquine for COVID-19?
Rick Baum
When “Moderate” Democrats Lead the Ticket and Win, Down-Ballot Candidates Soon Suffer Losses
Jake Johnston
Tens of Millions Will Be Pushed into Poverty Amid COVID-Induced Recession
Kim C. Domenico
Healthy and Unhealthy Fear in the Age of Coronavirus
John W. Whitehead
Draconian Lockdown Powers and Civil Liberties
Binoy Kampmark
University Bailouts, Funding and Coronavirus
Luke Ruediger
BLM Timber Sale Increases Fire Risk, Reduces Climate Resilience and Harms Recreation
John Kendall Hawkins
Slavoj Žižek’s Virulent Polemic Against Covid-19, and Stuff!
Nyla Ali Khan
Finding Meaning and Purpose in Adversity
April 07, 2020
Joel McCleary – Mark Medish
Paradigm Shift by Pandemic
FacebookTwitterRedditEmail