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China ready to hit back at U.S. with rare earths

reuters.com

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Re: China ready to hit back at U.S. with rare earths

#21

Post by bArray »

Firstly, I don't know what they expect to achieve with these threats. I think the US has shown so far that it's not going to easily bend to such threats, this was a bad move on their part. Maybe they knew this, hence using the media to broadcast this message. Still, this very much sounds like escalation talk rather than de-escalation.

Secondly, these "rare earths" aren't actually rare, most mines were simply shut down because they weren't competitive with China. The Chinese deliberately drove the price of various materials into the ground in order to gain a monopoly (a security risk I think the West should have seen coming). A local example of this was Sheffield steel.

Thirdly, if the cost of such materials was to rise significantly, hopefully it would have the affect of removing planned obsolescence being built into products. A mobile for twice the price might make people hold onto their mobile devices a little longer before upgrading, for example. Hopefully we can also get modular devices popular again with planned upgrade paths, rather than the glued-together mess we currently deliver.

Re: China ready to hit back at U.S. with rare earths

#22

Post by fauigerzigerk »

onetimemanytime wrote: post #6
varshithr wrote: post #3

This is bad for the whole world and reduces the efficiency of the global machine. Now countries have to explore more expensive mines to make up for the demand which could have easily been avoided. It feels like someone is dialing back the productivity of the entire world.

The idea is /was to renegotiate and than go back to "free trade." Put your seat-belts on

I understand the concept of breaking the rules in order to create momentum for changing them - and I agree with _some_ of the changes Trump demands.

But if trust in the effectiveness and enforceability of rules is eroded by nationalist bluster and unreasonable demands (e.g balanced current accounts) then there will be nothing left to go back to.

It will just be power politics forever, and that will degrade the world's economic strength and increase the risk of war.

Re: China ready to hit back at U.S. with rare earths

#23

Post by pytester »

simonh wrote: post #13
fastball wrote: post #4

Earlier quoted context omitted.

Unfortunately the global machine only works well if the parts are working together for the greater good in the first place, which is not a given.

One country benefiting more from trade than another isn't the same thing as the other country being worse off because of the trade. They're just not as much better off as they could have been. The goal of these disputes should be to reach a more equitable trading arrangement, not to stop or restrict trade that is 'harming' countries[1]. The Idea that the US is 'losing' due to the trade deficit and that reducing trade…

>The Idea that the US is 'losing' due to the trade deficit and that reducing trade with China will benefit America is utter tosh and even the administration's own trade advisers and negotiators are saying so (a bit more politely).

The problem isn't so much the deficit as it is the way the US has been seduced into relying upon the Chinese industrial machine.

The US industrial base has been depleting for decades. This presents a serious systemic risk - the US relies more and more on Chinese industry which can (and probably will, at some point) be cut off. This will result in massive inflation.

In (neoclassical) theory getting cut off isn't a problem because the market will simply bring all of that industry back to the United States. In practice, the flow of goods can be cut off overnight but an industrial base on a par with the pearl river delta would take at least two decades to build.

Re: China ready to hit back at U.S. with rare earths

#24

Post by tgsovlerkhgsel »

fastball wrote: post #4
varshithr wrote: post #3

This is bad for the whole world and reduces the efficiency of the global machine. Now countries have to explore more expensive mines to make up for the demand which could have easily been avoided. It feels like someone is dialing back the productivity of the entire world.

Unfortunately the global machine only works well if the parts are working together for the greater good in the first place, which is not a given.

> if the parts are working together for the greater good

No, it also works surprisingly well if everyone is acting rationally but purely optimizing for self-interest.

Re: China ready to hit back at U.S. with rare earths

#25

Post by NotPaidToPost »

simonh wrote: post #18
NotPaidToPost wrote: post #15

Earlier quoted context omitted.

There is nothing inequitable in the current trade arrangements that were set by the West. The US and the West have benefited massively, and still are. That line is just spin repeated again and again until people accept it without questions. The actual issue for the US is the rise of China as a global power that does not answer to them.

By and large you're mostly right. There are some inequities in the way China treats foreign firms though. Completely blocking all the main US web technology firms for example. However I don't think the harm being done to the US economy by the trade war is worth the benefits to be gained, even though there may be some benefits.

> Completely blocking all the main US web technology firms for example

That's a question of being willing to comply with Chinese contents-control requirements rather than trade per se. And if they comply they face a huge public opinion backlash in the US...

At the same time, it is understandable that a developing country try to develop its own companies rather than handed its market to US companies... Level playing field and all that ;)

Re: China ready to hit back at U.S. with rare earths

#26

Post by Blackstone4 »

bArray wrote: post #21

Firstly, I don't know what they expect to achieve with these threats. I think the US has shown so far that it's not going to easily bend to such threats, this was a bad move on their part. Maybe they knew this, hence using the media to broadcast this message. Still, this very much sounds like escalation talk rather than de-escalation. Secondly, these "rare earths" aren't actually rare, most mines were simply shut dow…

It's not just about threatening the US, it's about bolstering the Chinese moral across the nation, building a belief that China is a resilient underdog and the world is against it but it will fight back.

Re: China ready to hit back at U.S. with rare earths

#27

Post by programmarchy »

curiousgal wrote: post #16
holoduke wrote: post #7

It might in fact decrease pollution. Western powers will have to open up local national mines (those rare earths aren't so rare as people think). With tougher regulations regarding environment. At a significant cost of course.

The current U.S. administration is nothing but outright hostile against the environment. Those regulations will be laxed and nothing good will come out of this.

Do you think Chinese mines would pollute less than US mines? How many environmental activists do you think exist in China?

Re: China ready to hit back at U.S. with rare earths

#28

Post by Causality1 »

bArray wrote: post #21

Firstly, I don't know what they expect to achieve with these threats. I think the US has shown so far that it's not going to easily bend to such threats, this was a bad move on their part. Maybe they knew this, hence using the media to broadcast this message. Still, this very much sounds like escalation talk rather than de-escalation. Secondly, these "rare earths" aren't actually rare, most mines were simply shut dow…

Indeed. The American side of the trade war is not based on economic math. It's a political tool to win domestic support. What China does in response is essentially irrelevant, short of something extreme enough to wreck their own economy.

Re: China ready to hit back at U.S. with rare earths

#29

Post by Animats »

cm2187 wrote: post #12
varshithr wrote: post #3

This is bad for the whole world and reduces the efficiency of the global machine. Now countries have to explore more expensive mines to make up for the demand which could have easily been avoided. It feels like someone is dialing back the productivity of the entire world.

My understanding of the reason why the mines are more expensive in the US is because some of the minerals extracted along rare earth materials are very slightly radioactive, but enough to trigger US nuclear regulations, which makes mining uneconomical. It could probably be solved with more sensible regulations.

Where did that come from? The big problem with rare earth mines is huge tailings ponds.[1][2]

Mountain Pass CA has a reasonably clean process. Even the Sierra Club approved.

Molycorp built the current plant, but once they got going, China cut the price of rare earth metals. Then, once Molycorp went bankrupt, the price from China went up.[3]

[1] http://www.bbc.com/future/story/20150402-the-worst-place-on-...

[2] https://www.google.com/maps/@40.6383411,109.6903271,3872m/da...

[3] https://seekingalpha.com/article/4184580-new-china-rare-eart...

Re: China ready to hit back at U.S. with rare earths

#30

Post by NotPaidToPost »

Blackstone4 wrote: post #26
bArray wrote: post #21

Firstly, I don't know what they expect to achieve with these threats. I think the US has shown so far that it's not going to easily bend to such threats, this was a bad move on their part. Maybe they knew this, hence using the media to broadcast this message. Still, this very much sounds like escalation talk rather than de-escalation. Secondly, these "rare earths" aren't actually rare, most mines were simply shut dow…

It's not just about threatening the US, it's about bolstering the Chinese moral across the nation, building a belief that China is a resilient underdog and the world is against it but it will fight back.

> China is a resilient underdog and the world is against it but it will fight back.

Which not inaccurate.

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