Chinese Earth Metals in the Recent Months,

Chinese Earth Metals

In the recent months, the Chinese government has stopped the export of earth metals to several other countries, including Japan and, in October of 2010, the United States as well. Over the last few years, there has been a subterranean conflict between the two Asian nations over the topic of earth metals and their distribution throughout the world. This is a very serious situation. China has a near-monopoly on the production of rare earth metals which are used to produce everything from compact batteries to military hardware (Fernando). Without the access to these materials, it is nigh on impossible to continue the production of modern technological products. Japan, as a major manufacturer of technologies like cellular phones and satellites, the inability to acquire earth metals will have the potential to hinder and retard the continued production and progress of these technologies.

The squabble between Japan and China started over the Japanese detainment of a Chinese ship captain (Fernando). The inclusion of the United States in this unofficial embargo was in response to the United States' perceived impropriety. Restrictions on export of earth metals to the United States were "to denounce United States trade actions" (Lubin). Since the Chinese government controls approximately 95% of the world's rarest earth metals, there is very little these nations can do to prevent further punishment from China. As a government resource, the United Nations or other international agencies have limited abilities to coerce the Chinese people into cooperating with the United States or with Japan.

The problem with any monopolized enterprise is that the group who owns the majority claim of that enterprise can do whatever they like with the product. On March 31, 2011, the Chinese government announced a huge tax increase on rare earth metals (Jing). China's Ministry of Finance and State Administration of Taxation has announced that some of these metals will have a tax increase of 100%. For years the Chinese government has been producing rare earth metals at lower rates than other nations and forcing those governments to abandon the practice because of the financial burden. This has led to the monopoly on the production and now China is in a position of economic power and can raise the rates on the rare earth metals to any percentage they desire.