China now produces approximately 97% of the world’s rare-earth oxides, the raw materials that can be further refined into metals and blended into alloys that can be made into finished components.Over the past year, China has imposed global export quotas on the elements. Its Commerce Ministry has said total exports for the year would be capped at just under 30,300 metric tons, down 40% from last year.Sounds scary, right? Sounds as if China could really use this for a serious strategic advantage. But wait…
Earlier this week, London-based Industrial Metals magazine and the New York Times reported that China had blocked a shipment of the metals, in retaliation for Japan’s detention of a Chinese fishing boat captain on Sept. 7 amid a territorial dispute. Officials in Japan’s foreign and trade ministries said they weren’t aware of such an embargo.Not a very terrifying signal if your target doesn’t notice it.
There is a larger issue here. 97% market share would permit China to make a disruptive short-term embargo on exports. I doubt that this short-term disruption would buy China much, however, because it would carry a host of negative consequences for China. First, it would stoke regional fears and mistrust of China, which is already strengthening the position of the U.S. Second, it would foster the medium- to long-term development of alternative supply in the U.S., which the WSJ article indicates is already happening.
The problem China faces going forward is that its increasing power will provoke a distrusting backlash, which will provoke some reflexive resentment (”How come everyone is so angry at us? It’s not fair!”). Everything is happening so quickly for the PRC - relative to the rise of the U.S. at least - that it will have to do some serious maturing awfully fast if it wants to avoid feeding a self-fulfilling prophecy of being “encircled” by states hoping to contain it. A judicious and balanced U.S. foreign policy can help meet that maturing great power halfway, but the new kid on the block will make some mistakes that - hopefully - will lead to learning moments (including crises) without escalating into violent or costly disasters.
