Tuesday, October 19, 2010

China's Tantrum

. Tuesday, October 19, 2010

What in samhell is China thinking?

China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of those materials to the United States and Europe, three industry officials said on Tuesday.

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.

Willing to use their economic muscle? Perhaps... but if so that muscle is about as big as my pectorals. (Read: practically non-existent.) "Rare earth minerals" aren't all that rare (there are large deposits in California, Brazil, India, and many other places, and the minerals can also be gleaned from recycled electronics), and China's going to lose when this hits the WTO. This is at most a minor annoyance to the U.S., Europe, and Japan, but it makes China look like a spoilt child who's refusing to eat his vegetables.

Unlike Krugman, I don't think the answer is to argue with the child. Better to let him sit at his place until the veggies are eaten. In other words, if China wants to be a major power in global politics, it needs to learn what that entails. Lashing out like a four year-old isn't how it's done. (Neither is responding in kind, as Krugman evidently wants.)

I assume that this move is an attempt to signal to some domestic audience, but I don't know enough about China's internal politics to know what that intention might be. I'd appreciate any pointers in that direction. In the meantime, this is further evidence that China is simply not as mature of a global power as many think.


China's Tantrum




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