China Does The Trade War Thing

Overnight, news came that China was halting exports of rare-earth minerals to Western countries, sending stocks like Molycorp up sharping on a day when the broader market got killed. This appears to be yet another salvo in the ongoing power struggles between China and the West.

The excuse that China typically uses for such moves is that it needs the minerals for its own fast growing industrial usage, which sounds plausible prima facie. The irony here is that China's own aggressive acquisition of overseas resources makes it vulnerable to such stunts being pulled by other countries as well, especially given the current trend towards resource nationalism. The Chinese would probably not be amused if say the US decides that it needed more wheat and soy meal for 'its own use', given the lack of supplies in the market currently. There's a difference between people not having enough to eat and them not being able to buy an iPad due to component shortages.

Perhaps that's why China is busy building up its blue-ocean capabilities, so as to be able to project power far away from its shores in order to get the resources it needs to sustain its increasingly expectant people. The risk of them 'running into' the US Navy is definitely on the rise.

己所不欲，勿施于人 - 《论语·颜渊篇》