Why Is China Halting Rare Earth Shipments to the U.S.?

Can you say "trade war"?

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Trade war boosters, take heart: according to The New York Times, China seems to have "quietly halted" rare earth mineral shipments to the U.S. and Europe. The report is contested--China's "official stance" apparently "remain[s] unclear." If true, it's only the latest in a series of provocative measures, which include a recent embargo of rare-earth shipments to Japan. For those trying to convince American policymakers to play hardball with China, this move may give as a further sign of the need for action. Meanwhile, some conservatives are taking a moment to criticize liberal green energy plans, which depend on mineral supplies.

  • This Could Be 'Economic Blackmail' for Almost Anything, notes Business Insider's Gus Lubin, "including pressure to revalue the yuan and to cut unfair subsidies for Chinese clean tech." He points out that the U.S. has two options: " respond in kind, or  ... petition international authorities like the WTO. Again."
  • But Don't Freak Out Yet, Lubin adds: "those high tech products that need rare earth metals, like iPhones, are already made in China and exported to the US. This scenario will continue."
  • Actually, Do Freak Out  "In the present politically charged climate of U.S.-China relations, it is hard to imagine a more provocative gesture," writes Salon's Andrew Leonard. "The kindling necessary for a hot-burning trade war is already piled up and ready. China just threw a match on it."
  • This Is Precisely the Problem With Green Energy  Law professor William Jacobson takes a moment at Legal Insurrection to play I-told-you-so: "the Achilles heel of the Obama green energy agenda," he explains, has always been "that green energy technology depend[s] heavily on 'rare earth' minerals mined almost exclusively in China." Thus, "Obama merely is trading our dependence on foreign oil--as to which there are numerous suppliers -- for dependence on a single foreign source of green technology raw materials." Michelle Malkin's response is similar, tossing in a reference to "short-sighted enviro-zealots."
  • Except There Are Other Mineral Sources, counters William Winecoff at UNC Chapel Hill's International Political Economy group blog. "There are large deposits in California, Brazil, India, and many other places, and the minerals can also be gleaned from recycled electronics ... This is at most a minor annoyance to the U.S., Europe, and Japan, but it makes China look like a spoilt child who's refusing to eat his vegetables."
  • What Is This Even About?  It could be about Chinese domestic politics, muses Tufts's Dan Drezner at Foreign Policy, and "a need to assuage some nationalist outrage." But "no one really knows what Chinese domestic politics looks like, so who the hell knows how much validity to give to this argument," although The New York Times report does say "the decision was made after a Central Committee meeting." The move could also reflect Drezner's own theory, advanced in his book "that high expectations of future conflict between the sanctioning and the sanctioned state would lead to frequent episodes of economic coercion, but each attempt would yield only minimal concessions." Or it could just mean, he adds, "that China is being ridiculously short-sighted in their use of economic coercion."
  • 'A Minor Skirmish, But ... a Telling One,' decides Kevin Drum. "All the evidence suggests that China has been gearing up for a sustained resource war with the West for a long time." This move, though, is "so minor and so transparently dumb" as to reveal Chinese leadership as not thoughtful but "panicking:over demographics in the long run, managing an increasingly fractious middle class in the medium term, and over a global economic meltdown that finally seems to be seriously affecting them too in the short run."
  • Luckily, 'There Is a Long-Term Solution'  "We could have a domestic rare earth metal industry in the United States," explains The Atlantic's Alexis Madrigal, "but we have refused to support it in the belief that the market would always deliver what we needed from low-cost Chinese suppliers." Time to start it up--and it will take a while, he notes.
  • Skeptical of the Entire Story  The fact "that no US or western company has willingly come forward to validate that they are no longer receiving the minerals from China" strikesAtlantic contributor Damien Ma as a bit odd. "The NYT piece cites three anonymous industry officials, and I do wonder if the names of the sources will eventually be revealed. ... For now, it reads like some considerable logical leaps to weave together a narrative of China's new instrument of retaliation against perceived or real slights, particularly originating from western countries."
This article is from the archive of our partner The Wire.