The FT ran a story last night to stoke a bit of fear. China is apparently ruminating about banning rare-earth commodities for export:
China is exploring whether it can hurt US defence contractors by limiting the export of rare earth minerals that are crucial for the manufacture of F-35 fighter jets and other sophisticated weaponry, according to people involved in a government consultation.
The Ministry of Industry and Information Technology last month proposed draft controls on the production and export of 17 rare earth minerals in China, which controls about 80 per cent of global supply.
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Industry executives said government officials had asked them how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.
“The government wants to know if the US may have trouble making F-35 fighter jets if China imposes an export ban,” said a Chinese government adviser who asked not to be identified. Industry executives added that Beijing wanted to better understand how quickly the US could secure alternative sources of rare earths and increase its own production capacity.
China’s own rare earth security isn’t guaranteed. It can disappear when the US-China relationship deteriorates or Myanmar’s generals decide to shut the border David Zhang, Sublime China Information Fighter jets such as the F-35, a Lockheed Martin aircraft, rely heavily on rare earths for critical components such as electrical power systems and magnets. A Congressional Research Service report said that each F-35 required 417kg of rare-earth materials
The Chinese move follows deteriorating Sino-US relations and an emerging technology war between the two countries.
I would view this as a normal cold war “buzzing” of an enemy aircraft flown too close as navies joust. It would be very unwise for China to actually do this. Frankly, it’s pretty unwise to threaten it given it will accelerate the seeding of alternative sources.
The problem with threatening to blockade commodities to western economies is that it is such a clear reminder of its own vulnerability. Moreover, if it were to do it, it would give western nations the cover to respond in kind.
Like blockading iron ore, for instance.
That raises the possibility that China sees this as a nice feint to drive a wedge into ANZUS.
That said, the whole thing is such a bad idea for China that it makes me wonder if its chess game is not advanced one step further. Does the CCP want to ween us off its rare-earth teet so that it is not forced to use it aggressively in future and thereby jeopardise its own dirt imports?
Whatever the truth, commodity blockades of this nature are a prelude to China declaring war on two great powers in the US and Europe combined. I don’t think so.
But it’s time to diversify.
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