China Keeping Rare Earth Export Ban In “Back Pocket” To Punish Biden If He Gets Out Of Line
For the second time this week, western, English-language media outlets are reporting about rumblings within the Chinese Communist Party leadership about imposing new export controls on so-called “rare-earth metals” The news, first reported earlier this week in the FT, could quickly hobble the US defense industry.
While Bloomberg seemed to confirm the FT’s report about Beijing launching a “review” of its rare-earth export policies, the BBG reporters also took things a step further by suggesting that the Chinese government was merely trying to keep pressure on President Joe Biden now that ‘standing up to China’ has apparently become a bipartisan issue in the US.
While China has no plans to restrict shipments of rare earths to the U.S., it is keeping the plan in its back pocket should a trade war break out again, the person said. The Asian nation is also exploring a ban on rare earths as part of its sanctions on some individual companies, including Lockheed Martin Corp., which violated China’s core interest over arms sale to Taiwan, the person said.
All of this comes after Beijing reportedly readied a plan to restrict exports of the metals to the US back in 2019, when the US and China were still dealing with the fallout from Trump’s trade war.
To be sure, Beijing has already tried weaponizing rare earths when it slapped US defense contractor Lockheed Martin with sanctions.
China controls most of the world’s mined output from the broad group of 17 elements that are used in everything from smartphones to fighter jets, and has a complete stranglehold over processing.
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China’s dominance leaves the US with pretty much no alternatives to make up for the shortfall in supply, which would likely cause prices of these metals to skyrocket.
overseas industries with few avenues to immediately secure supply if curbs were to be put in place, since the US imports 80% of its rare earth supply from abroad.
Former President Donald Trump, of course, tried to rectify this terrible vulnerability with an executive order aiming to ramp up domestic production and processing, though presently the US remains entirely dependent, pretty much, on China for these metals.
Still, there’s reason for the US to take precautions against China imposing rare earth ‘restrictions’. After all, China didn’t hesitate to use rare earths as leverage during a territorial dispute with Japan back in 2011 – it imposed an export embargo, causing prices to skyrocket – when the two countries were fighting over some rocky islands in the Pacific.
And with Beijing’s crackdowns on Hong Kong and aggressive rhetoric (and, increasingly, actions) toward Taiwan grow increasingly emboldened, there may come a day when push comes to shove for Biden. And without another source for these metals, it could unleash a world of economic pain.
Fri, 02/19/2021 – 19:00