Breakin’ Supply: Electric Boogaloo

During the spat between China and Japan this week, China made headlines by temporarily cutting off the supply of rare earth metals to Japan, which were necessary for much of Japan’s high-end industrial production. The ban was reportedly repealed later in the week.

More interesting, and unfortunately much less widely reported: in the middle of all this, a publicly-funded Japanese research institute suddenly announced a cheaper alternative to rare-earth motors for hybrid vehicles, which would allow production to continue even if China kept the ban in place.

I want to say that this was a little victory for Japan, but now it’s pretty unsubstantial. So I would call it more of a warning to China: as any country gets more aggressive about screwing over foreign companies through economic restrictions for self-serving reasons, foreign companies will find ways to avoid that country. This is more true in the 21st century than it has ever been. Another good example of this, coincidentally in the same industry, is the recent Chinese rule requiring electric vehicles to be built in foreign-domestic joint ventures. Nissan bit the bullet and moved forward, but Peugeot decided to stand its ground and threatened to move production out of China.

For the comments (since nobody ever comments on economic pieces): Is “rascal” an acceptable translation for 野郎?

5 thoughts on “Breakin’ Supply: Electric Boogaloo”

  1. Great find on the rare metal alternative thing.

    Also notable is that when a country gets belligerent, others who have a beef with them tend to step up. Mongolia has lots of problems with China, and stepped right in to offer rare metals to Japan.

    “More interesting”

    Is it really more interesting, however, than the ban itself? How often do countries with a tight economic relationship slap bans like this anyway? Isn’t it more like apartheid era South Africa, North Korea, Russia doing it to its former USSR satellite states, Israel on the Palestinians, etc.? Japan was treated like these halfass outliers and I think there will be a lot more scrutiny directed toward China’s diplomatic behavior.

    During the OPEC crisis, the US government stated that it considered a ban on essential imports to be an act of war.

    Now, the US is moving to *Fix* the alliance and looks to be going through the first steps toward slapping massive duties on Chinese goods, branding China a currency manipulator.

    India has seen the hardball that China plays on any territorial issue and is now talking about increasing the militarization of its border – they contest something like 10,000 km2 of land.

    Of course, not all of that was inspired solely by China’s recent treatment of Japan, but it didn’t hurt.

    It was enough to elicit an editorial from Canada’s liberal newspaper talking about the danger of reliance on a single import source AND the danger of taking China for granted as a responsible international actor.

    People on the far right in the US have gone into China bashing mode (Pat Buchanan oped notable).

    I think that this is something of a turning point in East Asia, it isn’t only the Tibetan Buddhism hippies that are angry at China now.

    “Rascal” may not be a great translation of Yaro, but it is a great translation for the title of that show.

  2. China is the primary exporter of these metals, but they are FAR from the only supply. Many of them can even be mined in the US for a cost that would suddenly feel very reasonable if the Chinese supply seemed likely to dry up suddenly, not to mention huge deposits in Canada, Australia, South Africa, and other countries. Maybe there are even some deposits hidden away in the Japanese mountains?

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