myBlessedHope

Look out, we have a tiger by the tail, did you know how dependent we are on China for these key minerals?

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China to Halt Some Exports to U.S.

HONG KONG — 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.

Reuters

A worker at the site of a rare earth minerals mine.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle.

“The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.

They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions.

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.

Officials at the media relations office of China’s commerce ministry did not respond all day on Tuesday to e-mail or telephone calls seeking confirmation of the expanded embargo.

A few rare earth shipments to the West have been delayed by customs officials in recent weeks, said industry officials in China, Japan and the United States, but new restrictions on exports appear to have been imposed on Monday morning.

Industry executives said there had been no signal from Beijing of how long rare earth shipments intended for the West would be held by Chinese customs officials. Nor is it clear if occasional shipments are still being allowed out of the country, or if all shipments have now been suspended.

Word of the blocked shipments emerged from industry executives on Tuesday after an official China newspaper reported earlier in the day that Beijing planned next year to further reduce its annual export quota for rare earths.

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.

Wang Baodong, a spokesman for the Chinese Embassy in Washington, said on Tuesday that the Chinese government was putting new restrictions on the mining, processing and export of rare earths to protect the environment. But he said that China was not violating any W.T.O. rules in doing so and that it was not imposing an embargo or trying to use rare earths as a bargaining chip.

“With stricter export mechanism gradually in place, outbound shipments to other countries might understandably begin to feel the effect,” Mr. Wang said in an e-mail. “But I don’t see any link between China’s reasonable rare earth export control policy and the irrational U.S. decision of protectionist nature to investigate China’s clean energy industries.”

Nefeterius Akeli McPherson, a spokeswoman for the Office of the United States Trade Representative in Washington, said that American trade officials were looking into the matter, after a report of the Chinese customs restrictions was published on Tuesday afternoon on the Web site of The New York Times.

“We’ve seen the news report and are seeking more information in keeping with our recent announcement of an investigation into whether China’s actions and policies are consistent with W.T.O. rules.”

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China halting key minerals to US

China has halted some shipments to the United States of rare minerals vital to industry due to anger over a US probe, seizing on a tactic first used against Japan, The New York Times said.The newspaper, quoting industry officials, said that China quietly stopped shipments of so-called rare earths earlier this week in response to the US investigation into alleged Chinese subsidies into its green technology sector.

“The embargo is expanding” beyond Japan, the newspaper quoted an anonymous industry official as saying.

Major Japanese and US companies all make use of rare earths, a group of 17 elements in high-tech products from iPods to hybrid cars. China controls more than 95 percent of the global market.

Japanese industry said that Beijing took similar action last month after Tokyo seized the captain of a Chinese fishing boat in waters disputed between the two countries.

Japan eventually released the captain, triggering criticism by some conservative lawmakers who accused Prime Minister Naoto Kan’s left-leaning government of emboldening China.

The row over rare earths has led to calls in major economies to diversity away from China, fearing that Beijing will increasingly wield its economic clout for political reasons.

The United States announced Friday that it would investigate charges that China has handed out hundreds of billions of dollars in illegal subsidies in a bid to dominate the fast-growing green-energy sector.

The probe comes after the United Steelworkers union petitioned trade officials to investigate practices it claims contravene World Trade Organization rules and cost American jobs.

China denied the charges and hit back that the United States was also subsidizing green firms. China has also denied any official campaign to restrict exports of rare earths, suggesting that companies acted on their own.

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