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China: Debate on Rare Earths Export

Rare earth elements are essential to the manufacturing of high-tech devices, including cellphones, batteries, T.V and computer monitors and etc. According to 2009 data, China has 36% of the world's reserves (36 million tons), but it produces 97% of the world's rare earth elements.

Since September, when China temporarily suspended the export of rare earth metals to Japan because of the territorial dispute over Diaoyu Island, the tension over the rare earth supply has elevated and other countries have joined in the debate. The Federation of German Industries claimed that rare earths were becoming a “geopolitical issue”, even though the Chinese government claimed that rare earth metals would not be used as a “bargaining tool”. The latest development is that the U.S Secretary of State, Hillary Clinton, raised the embargo issue at a news conference yesterday.

So much for the international scene. Domestically, with the rise of nationalistic sentiment, a majority of mainland Chinese support the government's restriction on exporting rare earth metals.

History of rare earth export

The debate over rare earth actually started last year. Even back then, blogger SMPB looked at the issue as a matter of national security. The blogger reviewed the history of China's rare earth export:

在2002年的一份有关中国“入世后稀土产业的六大趋势”的官方报告里,中国对稀土资源的认知还普遍停留在对一般矿产资源的认知里,在那种全面拥抱WTO的开放心态作祟下,如何让国有的稀土资源赚更多的钱、如何掌握定价权,以及如何拓宽销售渠道及使其开放模式现代化是那时中国稀土贸易的主导话语权。

Back in 2002 after entering the WTO, China had little knowledge about the significant of rare earth and published a report on the 6 major trends of rare earth business. The report embraced the WTO agreement and aimed at making profits by controlling the price and building up the export channels, turning China into the dominant power in the rare earth trade.

但2009年4月,中国国土资源部发布新的《稀土矿开采总量控制指标》,并进一步降低了国内的产能,并继续冻结新的开采许可证,与此同时,中国更针对包括稀土在内的工业原材料… 实行限制出口和加收出口赋税及费用,这 一决定在欧盟、美国和日韩都引起强烈反弹,6月22日欧盟与美国将在正式要求与中国针对此事进行协商,若协商破裂,下一步将是要求世界贸易组织(WTO) 小组受理申诉。欧盟消息人士还称:“中国已经对这些原材料施加了不公平的出口配额和关税,这样做扭曲了全球市场并损害了欧洲和美国企业。”

However, in April 2009, the Ministry of Land and Resources of the People's Republic of China, announced a quota system in the mining of rare earth. The decision has reduced the amount of rare earth production and suspended permission for new mining projects. Moreover, the Chinese government also imposed restrictions on the export of rare earth metals through an export tax. The new policy has alerted the European Union, the U.S, Japan and Korea. On 22 of June, 2009, the European Union and the U.S decided to negotiate with the Chinese government. If negotiations failed, they would file a complaint to the WTO. Sources from the EU said that “The Chinese government's export tax on raw materials had distorted the global market and brought harm to European and American corporates”.

The blogger believed that the export restrictions are a matter of national security:

这次被欧美拖去WTO仲裁的20余种工业原材料与澳大利亚的铁矿石相比还有另一重更深刻的意义:国家安全―― 尤其是世界储量最巨的稀土资源,更是人类现代高科技武器最重要的原材料之一,而之前中国在此方面的大量出口失控从某种意义上说,已经造成了帮助国外的高科 技武品进步而危害自身战略安全甚至全球战略稳定的坏局,所以,中国限制其出口和欧美反对中国限制出口都有WTO所无法备述的重要战略原因。

The 20 industrial raw materials brought to the WTO table by EU and the US has a deeper significance: national security. Rare earth is the most essential material for the production of high tech weapons. China's earlier exports have endangered its own national security by helping foreign countries in the development of high tech weapons. This strategy issue is the unstated reason behind the debate.

International bullying?

In the new round of debate, blogger, exsoldier, also looks at the issue as international bullying of China. His blog title is “Foreign powers are pressuring China to export rare earths”. The blogger quotes a report, Rare Earth Elements: The Global Supply Chain (pdf) written by Marc Humphries, an analyst in energy policy, and points out that:

按人均储量算,美国和俄罗斯都要高于中国。而因为处于产业下端,中国以全世界三分之一的储量生产出占世界97%的稀土,储量和产量之间的关系出现了严重不 对等。而美国坐拥全球稀土资源的13%,却分文不动,百分之百地“依赖”进口。所谓中国限制稀土出口引起了一些国家稀土供应短缺的说法并不真实,应该说, 它们短缺的不是稀土,而只是中国生产的廉价稀土。

If we look at the reserve per capita, the rare earth reserves in the U.S and Russia are higher than China's. However, because China is at the lowest level of the production chain, it produces 97% of the world's rare earth elements. The ratio of reserve to production is totally out of balance. The U.S has 13% of the world's rare earth reserves but it produces none and depends 100% on importation. Hence, it is not true to say that Chinese restrictions on rare earth exports have lead to the shortage of supply. Rare earth is never in short supply, it is the cheap Chinese rare earth that is in short supply.

The nationalistic rhetoric has some resonance in internet forums. In Baidu Tieba, many accuse rare earth smugglers as traitors. In response to recent news about rare earth smuggling, Dandelion (成长的蒲公英a) says:

为了自己利益,你们就可以出卖国家利益?中国现在是个发展中国家,距离发达国家还有很遥远的距离,这最关键的问题,自然是经济!那些发达国家说中 国人爱占小便宜,不尊重中国人可他们呢,净占大便宜!不想让自己的资源流失,不想破坏自己国家环境,就来买中国的稀土!别看那一点稀土卖1亿多,在国际市 场上,稀土远远超出这个价,黄金当作白菜卖!就算你现在富可敌国,那又怎样呢,在外国谁会晒你?只有让我们的综合国力增强,经济迅速发展,我们在可以真正 地在外国人面前抬起头,可以骄傲地说:我是中国人!那就让我们从现在做起吧,不要再为了一点私利而破坏了国家整个政策,我们13亿人一起努力,团结的力量 才有凝聚力和战斗力,相信中国的明天会更加辉煌!(另外,鄙视美国人.日本人….鄙视为私利贩卖稀土的,你买的不仅是稀土,还有中国人的尊严,中国的 发展!青岛那人你真有病,忘记南京大屠杀了,还买给日本人,你不怕它发展原子弹第一个炸的就是你?)

For your personal interest you can sell out the country? China is a developing country and there is still a long way to go. The key issue is of course economics. When rich countries said Chinese people like to take a small advantage, they are so disrespectful of Chinese people. They have been taking a big advantage of us! They don't want to lose their own raw material reserves, they don't want to destroy their country's environment. Therefore, they come to buy Chinese rare earths. Although rare earth is expensive and profitable, its value has largely exceeded the price. We are actually selling gold for the price of vegetables. Even though you are now rich, you mean nothing to them. Only when our country is strong and our economy continues to growth, can we then walk without lowering our head and say proudly: We are Chinese! Let's not ruin the country's policy for our personal gain. The 1.3 billion people have to be united for China's bright future. (Besides, let's despise the American, the Japanese…. despise those who smuggle rare earth for personal gain. What you sell is not rare earth, but the dignity of Chinese people and the future of China. The smuggler from Tsingtao is sick. He has forgotten the Nanjing Massacre. He even dares to sell them to Japanese. Don't you worry that the next atomic bomb will be targeted at you?)

However, who has made the decision to sell rare earth in the first place? YierYier Wei questions the decision maker in Baidu Teiba and the nationalistic sentiments are quickly directed towards corrupt government officials:

唉呀咿呀喂: 中国的当权者,你们不会知道稀土有多重要

124.231.90.*: 他们只知道花天酒地,大贪特贪!

思念szy: 毕竟官员不是直选的,所以民意没太大作用

欧古利斯: 他们卖完之后都移民都国外去了,哪管我们的死活,所以不止要封锁稀土,官员也必须封锁,不准他们移民

YierYierWei: Chinese authority, you will never know how important rare earths are.

124.231.90.*: They only know where to eat and enjoy life, and get corrupted whenever they can.

Missing szy: The government officials are not elected. People's opinions don't count.

Aukulisi: After they sell away all our rare earths, they will migrate to other countries. They won't care if we are alive or dead. Apart from embargoing the rare earths, we have to block the government officials from emigrating.

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