China has the right to reduce rare earth export to its advantage, just like OPEC controlling oil. China has been giving a free ride to the world at the expense of its environment.
China uses it as a weapon against the dispute with Japan and/or other countries. Despite the mutually beneficial trade, Japan has been brutal to China in the last 250 years. The role in Opium Wars and the criminal acts in WW2 are just some examples. The two A-bombs should be dropped on the imperial palace, not for the innocent folks.
With the restriction of importing weapons from US, should China do the same in restricting the rare earth that helps US weapons?
Rare earth elements are available in many parts of the world. They are not mined due to the cost and the environment damages. It is about time China cares about its own environment and charges its minerals as much as the market can bear – it is a free market after all.
All the companies in mining these minerals will enjoy appreciation in the short term. However, it is the riskiest investment by now as we do not know what is the next move by China.
Chinese want to use this strategy to improve foreign investment and advantage in its industries that use these rare earth like hybrid cars and turbines. WTO cannot accuse China in limiting export of these rare earths as there is no such precedent.
China should and should charge these rare earths at 10% below the closest competitors. If they are more than 10% less, the local governments will step in to protect their industries and/or take actions.
China has at least 3 years before these foreign mines are ready - as of this writing some mines on rare earth are ready now. By then, China will decide the prices again based on whether they want to capture the rare earth market and/or their products that use these rare earth elements.
(c) TonyP4 3/8/11
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.