Perhaps, finally, the Chinese have gotten Tim Geithner to shut up about the yuan-dollar exchange rate. On Tuesday, The New York Times reported the news in China Said to Widen Its Embargo of Minerals—
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...
I've written some detailed articles on America's rare earth elements (REE) problem, so if you want some background, read these posts:
Yesterday, Bloomberg followed up on the Times report—
Actions by China, which produces more than 90 percent of the world’s rare earths, have drawn criticism from U.S. lawmakers and officials in Japan and Germany. China reduced its second-half export quota for the minerals by 72 percent in July. It is now further restricting exports, according to industry participants.
“Materials are still being held up in customs and shipments are delayed,” Jeff Green, president of J.A. Green & Company LLC in Washington, who represents miners and users of the elements, said in a telephone interview yesterday. “Many believe rare-earth quotas for the second half of 2010 are exhausted, leaving materials unavailable for sale.”
Wouldn't you like to be a fly on the wall in Obama's next meeting with his NSC staff?
President Barack Obama's spokesman said the National Security Council (NSC) staff is looking into reports that China is blocking shipments. “They’ve seen the reports,” press secretary Robert Gibbs told reporters traveling with Obama on a West Coast campaign trip. “They’re looking into them but don’t have anything they could confirm about those reports.”
Looking into reports? I'll bet they are! But the Chinese are not backing down—
China said the quota reduction was needed in order to shut polluting mines and still be able to meet domestic demand. It will “continue to supply rare earth to the world” while maintaining restrictions “to protect exhaustible resources and ensure sustainable development,” the Commerce Ministry said in a statement yesterday.
Contributing to the rise in prices is an expectation of further restrictions. China will probably tighten export controls on rare earths next year, Shigeo Nakamura, president of Advanced Material Japan Corp., said at a conference in China yesterday...
What’s not clear is whether China has imposed new restrictions or exporters have simply filled the quotas that China imposed in July, the people said.
No, it's not clear whether the export quota has been exhausted or whether China's REE embargo has been extended. Does this matter? I think not.