Daily News header

U.S Debt - What Happens if Washington Annoys China?

By  

You are about to start hearing a lot about rare earth minerals because it appears China is beginning to flex its economic and manufacturing muscle, taking advantage of its virtual monopoly on these critical strategic materials.

REE's are a group of chemically similar, hard to refine and process materials which are essential in making everything from cell phones to smart bombs. They are also essential for big wind generators, electric cars, and even computer hard drives.

The term "rare" doesn't mean they aren't relatively plentiful, but, as with many minerals, there are few "workable" deposits in the world.

China now owns about 97% of the entire world's production capacity of REE's and that, along with holding about $1 Trillion worth of U.S. government short term debt means that China can, if its government chooses, control access to most of the advanced modern technology we rely on.

China is showing that it isn't reluctant to begin using its economic and resource clout by possibly restricting export and sale of REE's, keeping them (quite legitimately) for domestic production - that's why most big wind farms get their generators from China or manufacture them in China.

One example of a not so subtle use of this clout occurred recently when Japan arrested some Chinese fishermen who Japanese authorities said were in violation of Japanese law. China appears to have responded by blocking shipment of REE's to Japan on September 21. Japan released the fishermen on the 24th.

There are widespread reports that on Friday the U.S. began an investigation of possible predatory pricing by China in sales of renewable energy products (all of which require REE's to manufacture.)

This week The China Digital Times carried a story stating that China was cutting export quotas of REE's despite the statements by some Chinese officials that they weren't aware of the restrictions. Some Chinese officials have also denied that there is an REE embargo in place against Japan.

See also a recent New York Times story.

Prices of both rare earth minerals and the few public companies which deal in them have surged in recent months.

Since U.S. plans for renewable energy including even CFL light bulbs as well as many military weapons from Aegis cruiser radars to battle tanks require rare earth elements and China owns most of the supply as well as holding a massive amount of U.S. debt, some are questioning whether the U.S. can possibly make any major economic or foreign policy moves without seriously considering how China might react.

It is important to remember that having countries taking advantage of natural resources or special manufacturing capacity to manage world politics is nothing new. History shows that every country (including the U.S.) which was ever in such a position has taken advantage of it.

Some of my earlier Newsblaze stories on this subject include:

U.S. House Addresses China's Rare Earth Monopoly

and

Renewable vs. Practical Electricity Obama Finally Embraces Nuclear?

Use the Newsblaze search feature at the top of the page and enter the term "rare earth element" (without the quotes) for more stories on this topic.

Today China also raised the interest rate its equivalent of a central bank charges.

John McCormick is a reporter, /science/medical columnist and finance and social commentator, with 17,000+ bylined stories. Contact John through NewsBlaze.

  Please leave a comment here     If it does not display within 10 seconds, please refresh the page

Related Business News

Hard Money Lenders make all kinds of loans, particularly high on the list are property loans, commercial business loans , loans to investors seeking to purchase and flip houses and businesses, with sufficient equity.
The Risk Takers is a 60 second vignette that captures famous entrepreneurs' secrets of success and lessons learned about starting and operating a small or large business.
The competition between tobacco and e-cigarette products is getting mixed reactions from consumers and key persons in the industry.
Recently, The Committee of Advertising Practice in the UK gave e-cigarette sellers the go ahead to increase advertisement of the e-product, which in turn will boost the e-cig market.
VoIP is on the move and businesses are gearing up to meet demand and supply in the marketplace. Yet, many wonder if VoIP is the right service for business expansion.
2014 is the 50th Anniversary Chicago International Film Festival. Cinema/Chicago, the organizer of the Chicago International Film Festival, is a year-round cultural and educational non-profit organization dedicated to promoting better communication.

 

NewsBlaze Writers Of The Month



Popular Stories This Month

newsletter logo

NewsBlaze
Copyright © 2004-2014 NewsBlaze Pty. Ltd.
Use of this website is subject to our Terms of Service and Privacy Policy  | DMCA Notice               Press Room   |    Visit NewsBlaze Mobile Site