Re: Try Australia
codejunky,
China first banned exports sometime last decade. The price shot up, but within six months had collapsed to half the intial price, and stayed there for a few years. But a lot of the non-Chinese production that came on stream then, closed again. Because the Chinese quickly saw their trick had failed - and so began exporting again. I hadn't realised exports had actually stopped briefly last year (according to the article) - but they've regularly threatened to do this - and given that all minerals are already owned by the Chinese government (you pay for a license to mine them) this "change" in the rules is just another in a long line of threats.
So, what to do?
ignore the issue. The market will eventually correct, like it did last time, if China pull the trigger. Companies can also keep small stockpiles of the stuff they absolutely need. But this alllows China to disrupt our industry for no cost to themselves. And there will be short-term disruption every time they do it.
Subsidise an industry. When the government pays for this, it's probably going to end up paying above the market rate. And there's no incentive to innovate to lower prices - from whatever companies we subsidise. But it's not actually a lot of money - so it's not a terrible idea. It's what the EU are doing - and I think maybe also Japan and South Korea?
Stockpile. Have a G7 stockpile to tide us over for say 2 years, until production can ramp up. This is a one-off cost, unlike a subsidy.
Or have a tariff. This stops it being an irregular problem, that the Chinese government can turn on-and-off when it suits them. It also punishes China directly - in a very minor way. But shows them that there are costs to dicking around - and that we're getting sick and tired of them causing so much trouble. China were invited into the WTO in order to incentivise them to join in the global economy, get rich and have their place in the world. But, particularly under Xi Xinping, they want to take more than their place. They don't just want to grow their economy, they keep trying to fuck up everyone else's. And it's clearly deliberate. In the way they subsidised their solar industry to kill off Europe's for example. Hence the EU tariffs on electric cars now. Plus they want to have the rare earth monopoly and exploit it to again, fuck with our electronics industries. The export ban last decade was to any company that didn't build its electronics in China - at which point they were fine with selling the rare earths. So what we need to do is impose costs on the Chinese economy for their government fucking about like this. In the hopes of disuading them. Also, because we need to have a sensible China policy. Hoepfully something less than the new (and even less stable) Cold War we're stuck in with Russia. If we can't get our governments to come up with sensible policies to show China that we are capable of action in defence of our own interests - then Xi Xinping will assume we're weak. And then we he goes too far, in a move threatening to destroy the global economy, and decides to invade Taiwan - he'll believe we won't try to stop him.
So we need robust China policy now, to estblish a working relationship where both sides know how far they can go, and what might lead to war. Otherwise we risk miscalculating our way into a war with China in the next decade. Because China is now so vital to our economic interests we're going to be forced to rebuild some of the Cold War state that we've let atrophy. We clearly need more weapons production, to support Ukraine, but also the kind of export control regimes to hopefully slow down China's massive armaments build-up. And finally a bit of an industrial / supply-chain policy to allow us to cope when the Chinese start messing with our economies to deter our politicians from stopping them invading their neighbours.
People whine about how the US is the self-appointed world's policeman - although they also often moan when the US doesn't step up to that role. But the world would be a much worse, and more dangerous, place if the Chinese became the dominant world power. So sadly I think we're going to have to have joined up military / security / industrial / supply-chain policies for the next few decades. The easy days of the 90s are gone - and international relations are expensive and important again.
Biting the hand that feeds IT
