This is not an indication of weakness. This is a strategy of how to win wars. And that strategy has been put to good use, even in today's context.
China will not try to be the country that in the end everyone has to depend on. That defeats the whole idea of globalization, where comparative advantage and economy of scale prevail. As they say, competition breeds innovation and China want competition, not total annulation of competition. But the USA wants everything in its hands, not allowing other countries to be ahead in innovation, not allowing other countries to have influence and be allowed to grow stronger or richer.
China, if I may venture to say so, hopes the USA and its partners will invest in rare earth mining and refining, a position the USA is finding itself rather difficult to transcend. Investing in rare earth mining and refining needs heavy investments and takes years to accomplish and there is always the niggling fear of China's overcapacity and still be calling the shots.
The idea is not to kill, but to keep competition alive, by being in a position to deal the cards just in case.
Anonymous
According to Kevin Wamsley on his site 'Inside China Business', the latest indication is that China is already stretched to provide rare earth elements for its own domestic demands like EVs, robots, drones, mobile phones, shipbuilding and above all its military expansion. Therefore, China need not have to cater to exporting rare earth elements as in the past, when its own demands were weak.
ReplyDeleteThis is a very worrying scenario for the USA and European countries going forward, especially their ability to satisfy the demands of their military. In any case, China already stipulated that China's rare earth elements cannot be used for making weapons, only for consumer products like EVs.
In the face of this, the only alternative is for the USA and its allies to do what they gloated about doing to counter China's rare earth dominance. Suffice to say, it will be a very expensive venture and takes a long time to come to fruition. Anything made with their rare earth elements will be much more expensive. But never mind, just print more toilet papers and increasing its defense spending is therefore not a problem. Time is also an important factor, and with China having all the advantage to grow stronger militarily, what are the USA and EU going to do?
China today is confident enough to be self-dependent in many aspects of its economy, with supply chains already deeply embedded into its manufacturing sector and its hold on raw materials needed to fuel them already secured.
When the West was powering along over the last few decades, China was concentrating on its agenda to be self-sufficient and less dependent on the West and has largely succeeded. During all this time, the USA was not building up its manufacturing but in fact decimating them. The USA and the Europeans were resting on their laurels not thinking of building up supply chains and depending on others. It was arrogance of a scale that was to lead them hanging out to dry by the Chinese in their present-day position.
It is payback time for China as it slowly cuts off rare earth elements for ASML. China's retaliation won't be swift or immediate unlike against the Dutch Government over the seizure of Nexperia, as China still have ASML lithography machines, that will be phased out when its own domestic machines are up to standard.
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