Global Trade Wars: China Turns up the Heat

CNN reports on the growing trade dispute over elements, after the Chinese government has given conflicting messages about whether the country will further restrict in the coming year:

Ground zero of a possible trade war between the United States and China may be a bunch of elements on the periodic table you’ve never heard of and couldn’t pronounce.

U.S. officials have been pushing China to allow its currency to rise against the dollar and level the international export playing field. And last month, the U.S. imposed tariffs on Chinese tires. China responded by announcing tariffs on U.S. chickens. Now, there are some indications that China may be cutting off supplies of 17 rare earth minerals to the U.S. and Europe.

Rare earth elements are crucial to a number of high-tech products, including aircraft, electronics and magnets commonly used in computers and such clean-energy products as wind turbines and electric cars. Demand is therefore growing, at a time when China has a stranglehold over the market.

Around 97% of rare earth products produced in 2009 came from China, according to the U.S. Geological Survey. And there are some indications that the Chinese are turning off the spigot to the rest of the world too.

Meanwhile, the Christian Science Monitor gives some background on what exactly rare earths are and why they are important:

Setting off speculation that China is manipulating exports to punish certain trade partners, Beijing announced in July it was slashing its six-month export quota of so-called ‘rare earths’ by 72 percent. Speculation continued this week with reports of an expanding embargo of the minerals.

But the so-called “rare earths” are neither rare nor does China have a lock on them. Although China produces 97 percent of the world’s rare earths, it contains only 30 percent of the world’s supply. The United States, Russia, and Australia all have significant reserves of the 17 elements essential in semiconducters, lasers, and other high-tech gadgets.

While mining them has proved uneconomical at usual world prices and environmentally harmful, that may be changing. Click through the following slides to read how rare earths are important to your daily life.

October 21, 2010, 12:50 PM
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