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A Tit-for-Tat with Uncle Sam: China Puts the Screws on Exotic Mineral Exports

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Brussel, Frankfurt (16/11 – 23)

A levying of embargoes and export bans, the imposition of sanctions, erection of fearsome “license” (= restriction) protocol: there’s nothing new about this back-and-forth in world trade, in the eternal jousting for advantage among markets and nations. The clever Chinese imagined they had the world tea market all locked up until an earnest Scottish botanist carrying the telling name of “Robert Fortune” snuck into the Middle Kingdom to observe their agriculture, steal tea plants, and pick up tricks of tea processing. The Chinese global tea monopoly was busted wide open.

The fortunate Mr. Fortune was actually in the employ of the insidious British East India Company; today tea is happily cultivated on every continent except Antarctica.

The Government of India is currently banning the export of onions. Read it and weep.

The USA did not approve of Japanese expansion throughout Southeast Asia in the late 1930s, and embargoed oil and rubber, among other critical items. This more or less forced Japan to go to war against the west. Thus Pearl Harbor and the ensuing four years of tragedy in the Pacific.

Readers should all be familiar with the European/American sanctions on the Russian Federation, attempting to cripple their economy for having started a “Special Military Operation” to halt the oppression and killing of ethnic Russians in eastern Ukraine. Guess who engineered that mess, a conflict now looking lost and forlorn for the noble democracies.

It’s China’s turn. American politicians, many in the pocket of super-affluent Chinese banks and state-controlled industries, have to be portrayed as “fighting China” so they go through the motions, by imposing chip technology export restrictions on what just happens to be their largest banker, supplier of consumer goods and trading partner.

China now responds, in what is essentially a Punch’n’Judy show, by erecting complex “export license” restrictions on gallium and germanium, rare earths technically classified as “minor metals”, not commonly encountered in nature, or refined as the by-product of other processes.

Note that these materials are used in the production of microchips critical to military applications, so it is not surprising that their export would be curtailed.

The Americans are attempting to impede the development of “advanced microprocessor technology”, a sweeping term covering a very large area of consumer, industrial and official applications, by the PRC.

According to the Critical Raw Materials Alliance (CRMA), an industry organ, China is the source of 80% of the world’s gallium and 60% of its germanium. You can be certain that miners around the globe and digging through their tailings to extract any of this trace material.

The export bans are doomed to fail, just as the manifold sanctions on Russian oil and gas have been handily circumvented by buyers and refiners everywhere.

China, like Russia, is acting carefully and prudently in these reprisals and counter-reprisals, assuming that the USA and its Euro-vassal are skidding downhill, with a soon-to-be-worthless currency, but are still dangerous. In short, the Americans are assumed to be insane.

Pause for a moment and imagine what would happen if the People’s Republic of China, producer of ~90% of the antibiotics sold in the United States of America, decided that they’d prefer to keep their medications at home, just in case, or perhaps market them somewhere else. Or that they would demand payment in Renminbi, on par with the wobbly dollar. No antibiotics? No problem.

That’s how crazy it’s getting.  

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