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China Embargos Rare Earth Exports To Japan
Hugh Pickens writes "The NY Times reports that the Chinese government has placed a trade embargo on all exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles. China mines 93 percent of the world's rare earth minerals, and more than 99 percent of the world's supply of some of the most prized rare earths, which sell for several hundred dollars a pound. The embargo comes after a dispute over Japan's detention of a Chinese fishing trawler captain whose ship collided with two Japanese coast guard vessels as he tried to fish in waters controlled by Japan but long claimed by China. The Chinese embargo is likely to have immediate repercussions in Washington. The House Committee on Science and Technology is scheduled to review a detailed bill to subsidize the revival of the American rare earths industry and the House Armed Services Committee is scheduled to review the American military dependence on Chinese rare earth elements."
MacArthur said if we didn't bomb China during the Korean War, we'd just end up fighting in Indochina next. Guess what? Indochina was the French Colonial name for Vietnam. Guess he was right. But seriously though, while nuking China isn't really feasible or productive, outsourcing production and relying too heavily on foreign sources of raw materials are generally bad ideas. Plus, its not like nearly every war in history has been fought over natural resources (to include territory) or anything...
Ya we need to look in to this. Despite the name, Rare Earths aren't. There are plenty of them. Of course they have to be mined, refined, and all that shit. That is largely left to China simply because China pays people shit and has no safety or environmental standards. However as you accurately note, they are important, we need to be supplying ourselves.
Helps when your government has total control over your ostensibly "capitalist" system. They recently levied some random bullshit charges against Toyota as well, a not so thinly veiled swipe at the Japanese government. Then there is Rio Tinot case where China made sure Rio Tinto didn't compete against a Chinese company by jailing their executives on a bullshit charge. They are also the same market that abhors protectionism and then is protectionist every chance they get. Even during the heyday of Japanese protectionism there were no where NEAR as bad as the Chinese. But of course, protectionism is bad, unless it benefits the Chinese, then its good.
Japan the US and the EU really should team up to take China to task for all the bullshit its pulling.
Monstar L
... But not intentionally so... if you RTFA, and I did, you'll find that rare earths actually aren't really rare. So while China MINES 93 percent of the world's rare earths, and thus supplies 99% of it, most countries COULD also do this if they wanted to. In fact, the last mine in the US closed in 2002 because, according to the article, of a radiation leak... seems these rare earth's are usually found with radioactive thorium and uranium. So what has happened is that China positioned itself as a reliable supplier of rare earths, and did so cheaply. Although the article doesn't say this, my guess is that China probably doesn't take the same safety precautions with mines and the thorium, which the article did say was costly to dispose of.
What has happened here is that China, again, produces things in an environmentally unfriendly way (since they apparently don't care much about the cost of crapping on their own country), and thus does so with cheap labor, thus becoming the most economically viable producer. Only now do they start to flex that muscle they have built...
So the world has a few choices - they can continue to rely on China, and deal with politically induced supply disruptions, find other countries that are willing to cheaply crap on their own environments and buy from them, or produce such materials locally but at much higher cost.
Brawndo: It's what plants crave!
I thought this kind of embargo would cause all sorts of sanctions from WTO members, and that China wasn't supposed to do this as a signatory of various WTO trade agreements.
I'm getting a bit annoyed at China's constant attempts at having their pie and eating it. But I guess they can get away with this - after all, way too many countries have their balls squeezed by China.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
In terms of natural resources, Japan is practically void of anything valuable. Lucky for the Japanese, China is still pissed over that whole "Rape of Nanking" deal.
China is one of the oldest civilizations on Earth, and at one time had perhaps the most powerful. And yet, after their golden age, they withered and spent the rest of history being what we would call a Third World Country. Only now are they finally ready for world power status again.
Contrast them against Japan, who only a little more than a century ago, was a dirt poor, backwards country that had to be literally forced at the barrel of a gun to open their doors to the world. By the 1930's... scant decades away... they became one of the most powerful industrialized countries in the world, creating a war machine that conquered a huge part of the globe in just a few years.
And then we nuked them. They went from world power, to shambles, a conquered country with two radioactive wastes where cities had been. And in less than three decades after that, they became one of the wealthiest and most technologically advanced countries on the planet... again... arguably more powerful economically than they were at the hight of their military might.
They did all this... twice... in the span of a single century, with no natural resources to speak of, save one: the Japanese people themselves.
I wouldn't count Japan out just yet.
Life is hard, and the world is cruel
You guys are surprisingly lighthearted over this. The chinese control a significant percentage of various rare earth supplies. They're called "rare" for a reason. This embargo is just anther example of the strong arm tactics the chinese government so liberally employs in their bid to extend their power and influence over the world. Currency manipulation is another way they deliberately try to wreck western economies. They're succeeding, too.
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They are not nice people. China is not "free" in any sense of the word.
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As they continue to turn the screws, expect to spend more for just about everything, which will be extra hard since all the jobs are going to china...
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Enjoy your coming third world lifestyle.
I have mod points. The reign of terror begins now.
I assume what the original poster means by pseudo-capitalism is that there is state control over certain sectors of the economy, and intervention in others (often at the whim of party officials with greased palms). In particular, this means that China has systematically undervalued their currency by ~20-40% against the dollar. This has several effects, the most obvious being that it substantially increases the competitiveness of China's exports (and cost of imports). This benefits a specific group of well connected industries in China, which among others are the mining and dirty manufacturing industries that are depleting China's natural resources and exporting them as quickly as they can. The trade-off domestically however, is that it decreases the buying power of the average worker considerably and leads to inflation. It leads to inflation because to maintain the undervaluation, China's central bank has to intervene in the currency markets and buy dollars to prevent the Yuan from appreciating, which increases the domestic money supply. By having to buy dollars (ie: US treasuries) China is essentially stuck buying huge amounts of US debt as long as it wants to maintain the export edge from having an undervalued currency (which is causing huge domestic pressures within China, there have been quite a few labor riots and urban-rural tension in the past few years). This has two effects on the US: one is that it keeps interest rates low and our debt cheap, the other is that it makes our exports 20-40% more expensive, costing the US at least a million jobs (most estimates are about 1.2m) at present.
So China is stuck with a dilemma: they can't become a first world country until they let their currency float, because their average citizens have reduced buying power. But they can't let their currency float until they have an economy that is sufficiently robust that it doesn't require a 20-40% import tariff/export subsidy (which is what the currency manipulation is doing), which means developing a domestic market under conditions of high inflation (currently ~8%) and high interest rates (currently 5.3%). And they have to do it before resource pressure (particularly food, water and pollution) overcomes economic growth, while funding a large chunk of the US current account deficit in the mean time. If China doesn't manage that, then both the current government and the economy collapses, and China goes through another cycle of regionalism and stagnation (and if China does manage it, we're probably looking at a world war over scarce resources).
China itself is a massive country and a few small islands really are not worth their time or effort. The life of the fishing captain is.
The two hundred mile exclusive economic zone is worth more than the life of a fishing captain to the Chinese government. The precedent of getting Japan and its allies to back down on a territorial claim may be even more valuable than that.
I wouldn't be too sure of that mine reopening. If China's state run economy has proved one thing it's that the free-market unmanaged economies of the West will time and again fail to even comprehend the forces arrayed against them. Narrow minded "Market Based" thinking is exactly what got us into this single supplier problem and naively thinking it will get us out is well... naive.
Whatever you think the "free-market" will do to get us out of this mess, the Chinese economic mega-complex has already considered three moves in advance and is working to counter it. People don't seem to understand that China-Inc is essentially the world greatest ever hyper-corporation: millions of companies, thousands of major corporations, and hundreds of banks all working under one overall direction and policy. Just about every trick you'd expect a major-corporation to pull can and has been considered, strategised and implemented by the this acutely self aware market entity.
Before anyone begins, this isn't some kind of bigoted post. What's really going on here is that the Chinese Communist Party has developed(invented really) a state controlled, capitalism driven, centrally managed and wholly unified economy; and it's as powerful an apparatus as you'd expect. It's one of the biggest civil and economic developments in world history. And if you expect this electric dragon--a vast, powerful and above all self aware economy under the control of a central brain--to act like your traditionally lauded free market fungus-like economies--efficient, large or small, but hopelessly undirected and prone to bottom feeding-- you are mistaken from the very outset. The Communist Party does not wait for startups, demand, financiers, or any other "market forces" to act. They order entire economic sectors to be created, dismantled and transformed overnight. And it has made them the richest country in the world.
That's what the Japanese are facing here, and that's what the rest of the world is going to have to face up to as well. If you think a little mine in a mountain pass is going to change things, then you're just another free market crazy barking at the invisible hand of the moon.
May the Maths Be with you!
I am aware that the Japanese suffered during the war and attacks on Tokyo and usage of the Bomb represent highly controversial issues which will probably never be satisfactorily resolved and I think it is good and important that the controversy of using weapons of mass destruction is aired and looked at from every possible angle even 60+ years later: which conflicts your claim that history is written by the victors because if it was then such dialog would not be occurring.
But make no mistake, the Japanese were the aggressors here and they engaged in a programme of Total War underpinned with fundamentalist self righteous fervor. They could of brokered truce at any time. They could of chosen not to treat civilian populations and POWs with utter contempt. They, unlike the Germans, cannot claim that they were pushed into a corner in denied opportunity of economic prosperity or national self determination by Allied nations; they were completely in the wrong. Millions of people suffered terribly as a consequence of their actions, including themselves.
You're not supposed to feel sympathy for the Japanese of the 30s and 40s; they were guilty of terrible atrocities, but that war is over now. You're supposed to feel sympathy for the Japanese of 2010, who weren't in charge almost universally weren't even alive for World War II and are not acting particularly imperialist or aggressive.
The point is that most white westerners have similarly barbaric atrocities of imperialism somewhere in their not-too-distant past. Go back far enough and everyone can find an ancestor that murdered a rival warlord's entire tribe; if you believe that what your grandparents' neighbours did should condemn you, we are all guilty!
Eventually we have to forgive, or at least forget, if we're going to live together.
You're supposed to feel sympathy for the Japanese of 2010, who weren't in charge almost universally weren't even alive for World War II and are not acting particularly imperialist or aggressive.
No, just no .. japanese of 2010 may not have undertaken those acts themselves, but that's no excuse for the denialism of history that's taking place in present day japan. When Tojo's granddaughter goes around saying things like:
"Japan did not fight a war of aggression. It fought in self-defense," she said. "Our children have been wrongly taught that their ancestors did evil things, that their country is evil. We need to give these children back their pride and confidence."
without condemnation, that is the responsibility of the japanese of 2010 to correct. This they have not done, which is why the legacy of the years leading up to the end of WW2 continue to plague us. Forgiveness will come in time, but only once the appropriate measures have been taken to atone.
The japanese of 2010 also have to take responsibility for the ongoing apartheid-like racism within their society. Numerous authors have, many of them japanese, have done much work to document this ongoing state and suffice to say that the evidence is quite damning. When the likes of David Suzuki (the well-known naturalist) goes out of his way to co-author of a book on the topic ("The Japan we never knew") then you know things are bad.
The best author on the topic is Yasunori FUKUOKA of Saitama University and many of his papers are available at http://www.kyy.saitama-u.ac.jp/~fukuoka/index.html. His opinion is not particularly complementary when speaking of the widespread discrimination against those no considered "japanese"
The Japanese government did not respect their rights as foreigners, instead they continued to oppress Korean human rights even after 1952, declaring "post-war democracy" whilst hiding the truth. The Japanese should recognize that not only the Japanese government, but also Japanese individuals should take responsibility for the difficulties imposed on Koreans in Japan.
The largest victims are the Zainichi, but similar oppression was experienced by the likes of the Burakumin and other groups.
Japan, both government and society, really needs to clean up their act before they claim to be victimised.
And this current idiocy was triggered by a Chinese fishing boat that rammed a Japanese coastguard ship, and the captain was detained. The islands where this happened have been occupied by Japan for over a century and were never populated by anyone before that. After WWII Japan was forced to give back all the territory it had occupied in Korea and China, and none bothered at the time about these insignificant islands. But about 20 years ago Chinese started wrapping themselves in the flag and calling this a great violation of their sovereignty. An issue that should be settled by low level bureaucrats is over and over again used to tear open the scabs of a war that ended in 1945.