China has stopped shipments of rare earth exports to Japan, limiting the country’s ability to make many of their own exports, such as iPods and cars, according to Google. The rare earth materials that Japan routinely used to get from China are minerals that are used in high-tech products.
The problem has been going on since September, when a boating incident in disputed waters soured relations between the two countries. China controls 95 percent of the global market of the shipments, and Japan has been making deals with private sector companies from Austrailia to get the minerals they need. Japanese officials are also talking to many other countries that have the ability to export these rare earth materials in order to stop the disruption in production of their goods.
Because of the bad relations currently going on between Japan and China, China is taking this opportunity to try to establish economic dominance in this region. Japan used to be the leader in electronic exports to the United States, but in 2002, China was able to surpass Japan in exporting electronics such as computers to the U.S., according to Nicholas Lardy. Since Japan is having to turn to other countries that have less of these materials than China does, it’s going to be way more expensive for Japan to continue to produce these technological products. This is the perfect way for China to overtake Japan and offer the same products at much more competitive prices.
If China continues to refuse to export these minerals, the prices for Japan will be astronomical, considering China has 95 percent of these rare earth materials. China is smart because this will make them the only competitor in the market that is able to offer low prices for these products. By doing this, China can go from being a producer of crude products to more focused on manufacturing, which could help their country out quite a lot.
Other countries, such as Austrailia, India, Vietnam, Mongolia, and Botswana, have these rare earth minerals, but they are going to have to work quickly to expand their exports, as they will be in high demand around the whole world, according to Google. Streamlining their processes could take many years, which will give China the time to expand their manufacturing and become the main source of technological products.
AFP, “Japan says China still blocking rare earth exports” Google