By KEITH BRADSHER
Published: October 19, 2010



HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle.

“The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.

They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions.

China mines 95 percent of the world’s rare earth elements, which have broad commercial and military applications, and are vital to the manufacture of products as diverse as cellphones, large wind turbines and guided missiles. Any curtailment of Chinese supplies of rare earths is likely to be greeted with alarm in Western capitals, particularly because Western companies are believed to keep much smaller stockpiles of rare earths than Japanese companies.

China experts said on Tuesday that Beijing’s assertive stance on rare earths might also signal the ascendance of economic nationalists, noting that the Central Committee of the Communist Party convened over the weekend.

A few rare earth shipments to the West have been delayed by customs officials in recent weeks, said industry officials in China, Japan and the United States. But new restrictions on exports appear to have been imposed on Monday morning.

Industry executives said there had been no signal from Beijing of how long rare earth shipments intended for the West would be held by Chinese customs officials. A few shipments are still being allowed out of the country for reasons that remain unclear: a fourth rare earth industry official said on Wednesday that one of the 32 authorized rare earth exporters in China had been allowed to export one container of rare earths to the West on Tuesday and hoped to be allowed to ship another on Thursday.

China’s official stance remained unclear on Wednesday. In an apparent reference to a report on Tuesday in the official China Daily newspaper, the commerce ministry said the report, predicting a decline of up to 30 percent in rare earth export quotas next year, was “totally groundless and purely false,” and added that no decision had been made yet on future quotas.

Without mentioning whether customs officials were interfering with statements to the West this week, the statement also said that, “China will continue to export rare earth to the world, and at the same time, in order to conserve exhaustible resources and maintain sustainable development, China will also continue imposing relevant restrictions on the mining, manufacture and export of rare earths.”

Japan’s Kyodo news agency reported on Wednesday that an unidentified diplomatic source in Beijing had said that rare earth shipments to the United States and Europe were being held up by customs officials for tighter inspections, one of the explanations that customs officials have also given in blocking shipments to Japan for the past month. But John Clancy, the trade spokesman for the European Commission, said in a statement on Wednesday that, “at this time, we cannot confirm claims made by European industry officials in media reports of China blocking rare-earth shipments to the” European Union.

The signals of a tougher Chinese trade stance come after American trade officials announced on Friday that they would investigate whether China was violating World Trade Organization rules by subsidizing its clean energy exports and limiting clean energy imports. 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 attempts to force multinational companies to produce more of their high-technology goods in China.

Despite a widely confirmed suspension of rare earth shipments from China to Japan, now nearly a month old, Beijing has continued to deny that any embargo exists.

Industry executives and analysts have interpreted that official denial as a way to wield an undeclared trade weapon without creating a policy trail that could make it easier for other countries to bring a case against China at the World Trade Organization.

So far, China seems to be taking a similar approach in expanding the embargo to the West.

Wang Baodong, a spokesman for the Chinese Embassy in Washington, said on Tuesday that the Chinese government was putting new restrictions on the mining, processing and export of rare earths to protect the environment. But he said that China was not violating any W.T.O. rules in doing so and that it was not imposing an embargo or trying to use rare earths as a bargaining chip.

“With stricter export mechanism gradually in place, outbound shipments to other countries might understandably begin to feel the effect,” Mr. Wang said in an e-mail. “But I don’t see any link between China’s reasonable rare earth export control policy and the irrational U.S. decision of protectionist nature to investigate China’s clean energy industries.”

Nefeterius Akeli McPherson, a spokeswoman for the Office of the United States Trade Representative in Washington, said that American trade officials were looking into the matter, after a report of the Chinese customs restrictions was published on Tuesday afternoon on the Web site of The New York Times.

“We’ve seen the news report and are seeking more information in keeping with our recent announcement of an investigation into whether China’s actions and policies are consistent with W.T.O. rules.”

Jeremie Waterman, the China director of the United States Chamber of Commerce, said that he was still checking government and industry sources to learn the extent of a suspension of Chinese rare earth shipments. “If it’s true, it’s disturbing news to say the least,” he said.

Mr. Waterman said that rare earths were so important to advanced manufacturing that restrictions on their trade might need to be put on the agenda of the Group of 20 meeting of heads of state, scheduled next month in Seoul, South Korea.

The Chinese government office that oversees rare earth policy, which operated with considerable independence for many years, was moved early last year into the Ministry of Industry and Information Technology. That ministry, formed only two years ago to draft plans for global leadership in many industries, has emerged as a bastion of economic nationalism.

Despite their name, most rare earths are not particularly rare. But most of the industry has moved to mainland China over the last two decades because of lower costs and steeply rising demand there as clean energy industries have expanded rapidly.

Congress is considering legislation to provide loan guarantees for the re-establishment of rare earth mining and manufacturing in the United States. But new mines are likely to take three to five years to reach full production, according to industry executives, although existing uranium mines may be able to move faster by reprocessing previously mined material, which often contains rare earths.

China reduced in July its export quota for rare earths for the second half of the year by 72 percent. Exporters had only six weeks’ of quotas left when China imposed its unannounced embargo on shipments to Japan.


Hiroko Tabuchi contributed reporting from Tokyo.
http://www.nytimes.com/2010/10/20/business/global/20rare.html?_r=1&pagewanted=all

So what do you think will happen Belly?

this is just a gambit in the new international trade and financial wars. we are entering into the age of neo mercantilism, where countries are going to start stockpiling everything...strategic minerals, oil, money, you name it. with the threats that the USA is putting on china regarding its currency manipulation, get the popcorn, sit back, and watch some interesting developments.

I think China is going to keep this going for as long as they are in a commanding position (money in the bank) and maybe will extend this type of actions to other fields in order to get ahead. This same actions were what I was referring to the other days and how China plans to use the command to move ahead. This is why USA debt is so a dangerous especially when the one who owns it is China who is not playing for second place here. China has mastered USA ways of throwing the rock and hiding the hand and now are using the same tactics but from a commanding position. So seat back and get the pop corn and watch for more actions like this ones to come.

We have a lot of rocks Belly. Look at a map of the Northern Hemisphere sans Mexico. The US has many assets and is well versed in the art of imperial control. China has many entities around it. India may actually play, as well as Vietnam, no love lost between Vietnam and China-remember the Vietnamese killed some China ass during 1979.

"Chinese Invasion of Vietnam
February 1979

China's relations with Vietnam began to deteriorate seriously in the mid-1970s. After Vietnam joined the Soviet-dominated Council for Mutual Economic Cooperation (Comecon) and signed the Treaty of Friendship and Cooperation with the Soviet Union in 1978, China branded Vietnam the "Cuba of the East" and called the treaty a military alliance. Incidents along the Sino-Vietnamese border increased in frequency and violence. In December 1978 Vietnam invaded Cambodia, quickly ousted the pro-Beijing Pol Pot regime, and overran the country.

China's twenty-nine-day incursion into Vietnam in February 1979 was a response to what China considered to be a collection of provocative actions and policies on Hanoi's part. These included Vietnamese intimacy with the Soviet Union, mistreatment of ethnic Chinese living in Vietnam, hegemonistic "imperial dreams" in Southeast Asia, and spurning of Beijing's attempt to repatriate Chinese residents of Vietnam to China.

In February 1979 China attacked along virtually the entire Sino-Vietnamese border in a brief, limited campaign that involved ground forces only. The Chinese attack came at dawn on the morning of 17 February 1979, and employed infantry, armor, and artillery. Air power was not employed then or at any time during the war. Within a day, the Chinese People's Liberation Army (PLA) had advanced some eight kilometers into Vietnam along a broad front. It then slowed and nearly stalled because of heavy Vietnamese resistance and difficulties within the Chinese supply system. On February 21, the advance resumed against Cao Bang in the far north and against the all-important regional hub of Lang Son. Chinese troops entered Cao Bang on February 27, but the city was not secured completely until March 2. Lang Son fell two days later. On March 5, the Chinese, saying Vietnam had been sufficiently chastised, announced that the campaign was over. Beijing declared its "lesson" finished and the PLA withdrawal was completed on March 16.

Hanoi's post-incursion depiction of the border war was that Beijing had sustained a military setback if not an outright defeat. Most observers doubted that China would risk another war with Vietnam in the near future. Gerald Segal, in his 1985 book Defending China, concluded that China's 1979 war against Vietnam was a complete failure: "China failed to force a Vietnamese withdrawal from [Cambodia], failed to end border clashes, failed to cast doubt on the strength of the Soviet power, failed to dispel the image of China as a paper tiger, and failed to draw the United States into an anti-Soviet coalition." Nevertheless, Bruce Elleman argued that "one of the primary diplomatic goals behind China's attack was to expose Soviet assurances of military support to Vietnam as a fraud. Seen in this light, Beijing's policy was actually a diplomatic success, since Moscow did not actively intervene, thus showing the practical limitations of the Soviet-Vietnamese military pact. ... China achieved a strategic victory by minimizing the future possibility of a two-front war against the USSR and Vietnam."

After the war both China and Vietnam reorganized their border defenses. In 1986 China deployed twenty-five to twenty-eight divisions and Vietnam thirty-two divisions along their common border.

The 1979 attack confirmed Hanoi's perception of China as a threat. The PAVN high command henceforth had to assume, for planning purposes, that the Chinese might come again and might not halt in the foothills but might drive on to Hanoi. The border war strengthened Soviet-Vietnamese relations. The Soviet military role in Vietnam increased during the 1980s as the Soviets provided arms to Vietnam; moreover, Soviet ships enjoyed access to the harbors at Danang and Cam Ranh Bay, and Soviet reconnaissance aircraft operated out of Vietnamese airfields. The Vietnamese responded to the Chinese campaign by turning the districts along the China border into "iron fortresses" manned by well-equipped and well-trained paramilitary troops. In all, an estimated 600,000 troops were assigned to counter Chinese operations and to stand ready for another Chinese invasion. The precise dimensions of the frontier operations were difficult to determine, but its monetary cost to Vietnam was considerable.

By 1987 China had stationed nine armies (approximately 400,000 troops) in the Sino-Vietnamese border region, including one along the coast. It had also increased its landing craft fleet and was periodically staging amphibious landing exercises off Hainan Island, across from Vietnam, thereby demonstrating that a future attack might come from the sea.

Low-level conflict continued along the Sino-Vietnamese border as each side conducted artillery shelling and probed to gain high spots in the mountainous border terrain. Border incidents increased in intensity during the rainy season, when Beijing attempted to ease Vietnamese pressure against Cambodian resistance fighters.

Since the early 1980s, China pursued what some observers described as a semi-secret campaign against Vietnam that was more than a series of border incidents and less than a limited small-scale war. The Vietnamese called it a "multifaceted war of sabotage." Hanoi officials have described the assaults as comprising steady harassment by artillery fire, intrusions on land by infantry patrols, naval intrusions, and mine planting both at sea and in the riverways. Chinese clandestine activity (the "sabotage" aspect) for the most part was directed against the ethnic minorities of the border region. According to the Hanoi press, teams of Chinese agents systematically sabotaged mountain agricultural production centers as well as lowland port, transportation, and communication facilities. Psychological warfare operations were an integral part of the campaign, as was what the Vietnamese called "economic warfare"--encouragement of Vietnamese villagers along the border to engage in smuggling, currency speculation, and hoarding of goods in short supply."

http://www.globalsecurity.org/military/world/war/prc-vietnam.htm

Indo-China War of 1962

The Chinese have two major claims on what India deems its own territory. One claim, in the western sector, is on Aksai Chin in the northeastern section of Ladakh District in Jammu and Kashmir. The other claim is in the eastern sector over a region included in the British-designated North-East Frontier Agency, the disputed part of which India renamed Arunachal Pradesh and made a state. In the fight over these areas, the well-trained and well-armed troops of the Chinese People's Liberation Army overpowered the ill-equipped Indian troops, who had not been properly acclimatized to fighting at high altitudes.

After its independence in 1947, India not only inherited Britain's occupation of parts of Chinese territories, but also further encroached northward and pushed its borderline to the McMahon Line in 1953, as a result, invaded and occupied 90,000 square kms of Chinese territories. At western sector, in 1959, India voiced its claim to the Aksai Chin areas, counted 33,000 s.kms, of Xinjiang Uygur Autonomous Region of China. In April 1960, Chinese Premier Zhou Enlai went to New Delhi to hold talks with Indian Prime Minister Nehru, no agreements were reached due to India's insistence on its unreasonable stand. The ensuing meetings between the officials of the two countries also produced no results.

Unable to reach political accommodation on disputed territory along the 3,225-kilometer-long Himalayan border, the Chinese attacked India on October 20, 1962. At the time, nine divisions from the eastern and western commands were deployed along the Himalayan border with China. None of these divisions was up to its full troop strength, and all were short of artillery, tanks, equipment, and even adequate articles of clothing.

Indian decisions taken at that time were not grounded in adequate, up-to-date, knowledge of what was transpiring within China or the motivations of China’s then key decision-makers. Stated briefly, New Delhi failed to decipher the “Chinese calculus of deterrence” and India suffered disproportionately.

In Ladakh the Chinese attacked south of the Karakoram Pass at the northwest end of the Aksai Chin Plateau and in the Pangong Lake area about 160 kilometers to the southeast. The defending Indian forces were easily ejected from their posts in the area of the Karakoram Pass and from most posts near Pangong Lake. However, they put up spirited resistance at the key posts of Daulat Beg Oldi (near the entrance to the pass) and Chushul (located immediately south of Pangong Lake and at the head of the vital supply road to Leh, a major town and location of an air force base in Ladakh). Other Chinese forces attacked near Demchok (about 160 kilometers southeast of Chusul) and rapidly overran the Demchok and the Jara La posts.

In the eastern sector, in Assam, the Chinese forces advanced easily despite Indian efforts at resistance. On the first day of the fighting, Indian forces stationed at the Tsang Le post on the northern side of the Namka Chu, the Khinzemane post, and near Dhola were overrun. On the western side of the North-East Frontier Agency, Tsang Dar fell on October 22, Bum La on October 23, and Tawang, the headquarters of the Seventh Infantry Brigade, on October 24. The Chinese made an offer to negotiate on October 24. The Indian government promptly rejected this offer.

With a lull in the fighting, the Indian military desperately sought to regroup its forces. Specifically, the army attempted to strengthen its defensive positions in the North-East Frontier Agency and Ladakh and to prepare against possible Chinese attacks through Sikkim and Bhutan. Army units were moved from Calcutta, Bihar, Nagaland, and Punjab to guard the northern frontiers of West Bengal and Assam. Three brigades were hastily positioned in the western part of the North-East Frontier Agency, and two other brigades were moved into Sikkim and near the West Bengal border with Bhutan to face the Chinese. Light Stuart tanks were drawn from the Eastern Command headquarters at Calcutta to bolster these deployments.

In the western sector, a divisional organization was established in Leh; several battalions of infantry, a battery of twenty-five-pounder guns, and two troops of AMX light tanks were airlifted into the Chushul area from Punjab. On November 4, the Indian military decided that the post at Daulat Beg Oldi was untenable, and its defenders were withdrawn over the 5,300-meter-high Sasar Brangsa Pass to a more defensible position.

The reinforcements and redeployments in Ladakh proved sufficient to defend the Chushul perimeter despite repeated Chinese attacks. However, the more remote posts at Rezang La and Gurung Hill and the four posts at Spanggur Lake area fell to the Chinese.

In the North-East Frontier Agency, the situation proved to be quite different. Indian forces counterattacked on November 13 and captured a hill northwest of the town of Walong. Concerted Chinese attacks dislodged them from this hard-won position, and the nearby garrison had to retreat down the Lohit Valley.

In another important section of the eastern sector, the Kameng Frontier Division, six Chinese brigades attacked across the Tawang Chu near Jang and advanced some sixteen kilometers to the southeast to attack Indian positions at Nurang, near Se La, on November 17. Despite the Indian attempt to regroup their forces at Se La, the Chinese continued their onslaught, wiping out virtually all Indian resistance in Kameng. By November 18, the Chinese had penetrated close to the outskirts of Tezpur, Assam, a major frontier town nearly fifty kilometers from the Assam-North-East Frontier Agency border.

The Chinese did not advance farther and on November 21 declared a unilateral cease-fire. They had accomplished all of their territorial objectives, and any attempt to press farther into the plains of Assam would have stretched their logistical capabilities and their lines of communication to a breaking point. By the time the fighting stopped, each side had lost 500 troops.

After administering a blistering defeat in 1962, the Chinese forces withdrew 20 km behind the McMahon Line, which China called “the 1959 line of actual control” in the Eastern Sector, and 20 km behind the line of its latest position in Ladakh, which was further identified with the “1959 line of actual control” in the Western Sector.

The USA has none of these strategic problems. Canada is simply put an extension of US interest, and a quasi-State of the US. Mexico, well you know the words: "Pobre Mexico, tan cerca de los EEUU y tan lejos de Dios." Says, it all.

And I've not mentioned the Chinese-Japanese rift. A serious rift if there ever was between major nations. So again, my point is China has a lot on its plate.

Dread, you have enough pop-corn

Sounds as if the Chinese are doing the sensible thing and limiting exports. These scarce products need to be used strategically to help create a greener planet; other uses need controlling.
Naturally wind turbines in China have priority over some crazy electic garage door opening mechanism manufactured in the US.
S.

ABC, please. the chinese are not thinking of any green planet when they restrict exports. they pollute more than anyone else. they are making strategic decisions. watch stockpiling of commodities become the new rage. say you heard it here first. guys are going to start buying up surplus resources, such as primary products, and there is going to be some real fun, in the near future.

Atabey

So according to you now, Canada and Mexico are an extension of USA. So what happens in Canada decides not to sale their goods, is USA going to start a war, or if Mexico decides to do the same what happens. Sometimes I wonder if you realize USA is broke with no money in the bank. Who is going to finance the next war because there is NO MONEY in USA to pay for it. How long would it be before countries start to see that lending money to a broke country is not a good idea anymore. You seen to think USA is seating in a stock pile of money for some reason, that was in 1950s not in 2010.