China Said to Widen Its Embargo of Minerals

[phantom power]

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle.

“The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.

They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions.

http://www.nytimes.com/2010/10/20/business/global/20rare.html?_r=1

[kristopher]

1. Let them; there are plenty of these resources around the world.

This is a self correcting problem.

[phantom power]

4. I don't pretend to know what they're thinking, but I have 3 ideas.

1) economic sabre rattling. In the context of economic warfare, it seems like a significant weapon. It's one thing to say "we could replace it." But in the near to mid term, they can cut off 95% of the world's supplies. And if it's warfare, in the long run, we're all dead :-)

2) They are (in my father's words) husbanding their resources. China is in a position to become one of the few nations with both an enormous manufacturing infrastructure and all the resources needed to supply it and fuel it.

3) They want to drive up the price, and find a sweet spot where they make more money, but stay below the threshold where people put up the investment to start exploiting resources elsewhere.

[AlecBGreen]

5. not quite

"...and all the resources needed to supply it and fuel it."

While they have abundant supplies of certain raw materials (coal for one) they are extremely limited in other areas (timber, fresh water, iron). They are a giant vaccuum sucking up much of the worlds resources, just as the USA and Europe are.

[qazplm]

2. seems short-sighted to me

the issue is that we have many of those rare earth materials (or can get our hands on them) but it is in the short-term expensive to ramp up mining and production.

But in the long-term, all China is doing is driving us to begin that process earlier, which means more supply, which means lower prices.

[kristopher]

3. Exactly. They are cutting of their nose to spite their face. nt