Did you think that Beijing would be selective in its rare earth trade embargo, wielding its market position against Japan (alone, among all the countries of the world) as a weapon of last-resort?
American trade officials announced last Friday that they would investigate whether China was violating international trade rules by subsidizing its clean energy industries. 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 efforts to force multinational companies to produce more of their high-technology goods in China.
[…]
Hours later, according to industry officials, Chinese customs officials began singling out and delaying rare earth shipments to the West. [emphasis added]
Earlier this year, Taiwan's Chinese Nationalist Party signed a free trade agreement with China, all the while insisting that the Benevolent Butchers of Beijing would never abuse their economic power over Taiwan.
That proposition of theirs appears more divorced from reality with each passing day.
"[This is] going to encourage some obvious policy responses by the rest of the world. Non-Chinese production of rare earths will explode over the next five years as countries throw subsidy after subsidy at spurring production. Given China's behavior, not even the most ardent free-market advocate will be in a position to argue otherwise." [emphasis added]
"China has no choice but to take the necessary 'coercive measures.' "
And a mere three days later, Japanese prosecutors cut loose Captain Ramboat. A sad spectacle it must have been to watch them claim that their decision was based solely on the law…and then hear them quickly contradict this by declaring that the political importance of smooth Sino-Japanese relations was something they also had to consider.
Japan's Asahi Shimbun newspaper outlines the precise 'coercive measure' which may have been most instrumental in bringing Japan to heel:
A Chinese government source said Thursday that Beijing resorted to the harsh measure of stopping all exports of rare earth metals to Japan because "Japan had crossed over the red line."
The paper further reports that "a sense of shock, fear and helplessness" began to grow in the Japanese industrial sector, as managers discovered to their horror the folly of economic dependence on Asia's Communist behemoth. The Japan Times elaborates on this latter point:
Japan imported 31,383 tons of rare earths in 2008, of which 29,275 tons, or 92 percent [emphasis added], came from China…
92%. [And in another news, a hospital somewhere in Michigan recently granted Dr. Jack Kevorkian control over 92% of their life-support equipment. Because really, what could go wrong?]
The Asashi Shimbun reports that China's unofficial embargo was apparently not as clumsy or as random as a blaster:
The stoppage was designed to hurt Japan's high-tech industries, and it was apparently planned well in advance.
According to several sources, top leaders of the Chinese Communist Party issued instructions in mid-September to the Foreign Ministry, Commerce Ministry, State Development and Reform Commission as well as researchers covering Japan at government-affiliated think tanks to devise specific measures that could be imposed on Japan.
"Instructions were given to consider sanctions that would hit the Japanese economy where it is especially vulnerable," a Chinese government source said [emphasis added].
It's almost superfluous to point out that earlier this year, the Chinese Nationalist Party of Taiwan assured voters that the Communist Party of China would never, ever, EVER mix politics and economics. Signing a free-trade agreement with Zhongnanhai would be an economic shot in the arm for Taiwan — so the argument went — and there was absolutely no chance that becoming Beijing's industrial and commercial satellite would imperil Taiwan's democracy or its sovereignty.
Ask the Japanese whether that holds true today. Because the Taiwanese should be aware that the KMT's flimsy hypothesis now utterly without foundation.
The only question which remains is: When will Communist China choose to launch a similar assault on the economy of democratic Taiwan?
No way in hell that'll happen. They didn't have the stones to prosecute a mere Chinese fishing boat captain…but instead they'll take on China in a WTO courtroom, mano-a-mano?
