The coming rare earths war China has the advantage

If there is a moment of origin for the China shock that has hit the United States, it is events around rare earths in the late summer and early autumn of 2010. That August, China reduced its export quotas for the rest of the year. The following month, it stopped selling rare earths to Japan after the Japanese Coastal Guard detained the captain of a Chinese fishing trawler that had struck one of its vessels in the waters around the territorially-disputed Senkaku Islands. Within four days of losing access to metals on which the country’s electronics and car industries depended, Japan backed down. But China retained the embargo for another five weeks. By November, rare earth prices had soared, and they would not return to their pre-crisis level for months.

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