Tuesday, October 19, 2010

Nice. The dragon starts to squeeze us. Trade wars rarely end well. Especially in the middle of a world-wide depression.

China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of those materials to the United States and Europe, three industry officials said on Tuesday.

China mines 95 percent of the world’s rare earth elements, which have broad commercial and military applications, and are vital to the manufacture of products as diverse as cellphones, large wind turbines and guided missiles. Any curtailment of Chinese supplies of rare earths is likely to be greeted with alarm in Western capitals, particularly because Western companies are believed to keep much smaller stockpiles of rare earths than Japanese companies.

China experts said on Tuesday that Beijing’s assertive stance on rare earths might also signal the ascendance of economic nationalists, noting that the Central Committee of the Communist Party convened over the weekend. . .

The signals of a tougher Chinese trade stance come after American trade officials announced on Friday that they would investigate whether China was violating World Trade Organization rules by subsidizing its clean energy exports and limiting clean energy imports. The inquiry includes whether China’s steady reductions in rare earth export quotas since 2005, along with steep export taxes on rare earths, are illegal attempts to force multinational companies to produce more of their high-technology goods in China.

Despite a widely confirmed suspension of rare earth shipments from China to Japan, now nearly a month old, Beijing has continued to deny that any embargo exists.

Industry executives and analysts have interpreted that official denial as a way to wield an undeclared trade weapon without creating a policy trail that could make it easier for other countries to bring a case against China at the World Trade Organization.

So far, China seems to be taking a similar approach in expanding the embargo to the West.


Anonymous said...

Gerat, we're making them mad...

deadbolt said...

Reminds me of a time when I was shooting some eight ball late one night at a Korean pub in a wonderful place named 'Song Sun Do'.

Near the end of a heated game with the pub owner I was going in for the kill, when suddenly, ole Ahdashi snatched up the eight ball and commenced to changing the shot rules...

Commies. Can't trust'em. The end.

Defender said...

The great and powerful Zero WARNED them to get THEIR currency straight while BORROWING from them to keep fedgov solvent, or what passes for it.
I'm no diplomat, but...

Defender said...

A commenter at freerepublic.com points out that we used to mine it here, but it was cheaper and "more environmentally friendly" to buy it from the Chinese.
Another says the U.S. sold them the technology to produce rare-earth magnets (? used in strategic energy devices like windmill generators?) in the 1990s. Clinton.
I'm shocked. Shocked, I tell you.

Anonymous said...

In 1998 Bill Clinton and the Republican controlled Congress voted to eliminate the annual review of Most Favored Nation status for Red China. In essence they gave Red China uncontrolled, unfettered trade access INTO this country....no tariffs, no taxes, no regulation of goods produced in Communist China and imported here. Today, in less than 8 years alone, we've had more than 40,000 factories shut down and our trade deficit with the Commies in China has ballooned to 3 trillion dollars.

I say BRING ON THE TRADE WARS ! Everything MADE in RED CHINA needs a 100% tariff put on it. The RED CHINESE need us. We don't need them.

Yessir....I invite a trade war. Because right now we're losing anyways to the Commies. Perhaps then, when we keep all the garbage from China OUT, we would go back to manufacturing and become a producer not a consumer.


Anonymous said...

In this great game of chess, why would China want to cooperate with Western nations when it appears that we don't pay our bills?


Sean said...

I'm not worried about them cutting us off from anything. I'm worried about them showing up looking for something of value, to replace their worthless American dollars. And yes, I know about their 1.1 billion dollar purchase of oil,gas and mineral rights in Texas. What if their navy shows up in the port of Houston, looking for something a little more "permanent"? King Obongo will probably bow to them, too.

Anonymous said...

But.... They're our "friends."

So are the Russians!



Anonymous said...

NEW YORK -- Federal Reserve Chairman Ben Bernanke said Friday [October 15th] that the central bank stands ready to buy bonds to boost the economy but offered no specific timeframe. With no new details to go on, bond traders sold off most types of Treasurys.


This gets complicated, so please bear with me.

An undervalued renminbi favors the Chinese export market. Geithner has hectored the PRC (to no avail) to revalue their currency upward so as to make US domestic manufacturing more competitive.

This would presumably lead to an increase in US employment. As a result, the Chinese would lose market share and suffer an economic contraction at home.

Obviously, they will not agree to this. So, if you cannot get the Chinese to increase the value of their currency, decrease the value of your own.

This would be the net effect of Bernanke's "quantitative easing," i.e., inflating the money supply through the purchase of bonds.

As a result of their export-oriented trade policy, the Chinese hold a large position in US dollars. Inflation will impose a severe loss on the value of these holdings.

The Chinese reply to this threat by saying, "Oh, you want us to reduce our exports? O.K. How do you like it when we embargo rare earth minerals?

"Chinese customs officials imposed the broader restrictions on Monday morning [October 18th], hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions."

I sense a trade war is about to develop. This will kill off a good bit of the retail industry, because most of what you find on the shelves at Target and Wal-Mart comes from China.


EJR914 said...

That's never good. I guess its time to start making our own goods once again. Start mining for our own materials.