The Rare Earth Battle

(Joseph J. Dehner, Frost Brown Todd LLC)
An immediate response of China to the US announcement that it would launch a 301 inquiry aimed at the Chinese “green” technology sector is a rare earth counter-attack. In this reported highly protectionist move, China has temporarily halted exports to the US of rare earth materials. Used in making advanced technology products, rare earth materials are a variety of scarce minerals. China currently produces 95% of the world's trade in these important items, according to a New York Times article of October 19, 2010 - K Bradsher, “China is said to halt exports to US of some key minerals.” The report indicates that this is being done without any official announcement of such an embargo aimed at any particular country. Read more here.

China Said to Widen Its Embargo of Minerals

(New York Times – Keith Bradsher)

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. Read more here.