Written by Mr. Chun
China first politely and then military, showing its style as a great power!
Before this key economic and trade negotiation between China and the United States, China's Ministry of Commerce put out a clear signal flare. A batch of rare earth export license applications have been approved. This matter starts from April this year. China has implemented export controls on medium and heavy rare earths with high military value, and companies must first obtain a license if they want to export. Now, the valve has been loosened on the eve of the negotiations, especially the priority of approving civilian rare earths to American car companies such as General Motors and Ford. It is clear that it is giving the US olive branch: You see, we talk with sincerity, but we will not give in to the principled issues!
Many friends may not understand why they should relax rare earth restrictions on US companies before the Sino-US negotiations? In fact, this question is easy to understand. On the one hand, we have imposed time restrictions, which is equivalent to taking the initiative into our own hands. On the other hand, in recent US-Japan tariff negotiations, Japan intends to help the United States solve the rare earth problem.
Specifically, China's relaxation of rare earth restrictions this time is not a complete lifting of the ban, but a precise design of "validity period of six months + technical tracking". The temporary license not only alleviates the urgent need for American automakers to shut down production lines due to supply cuts in rare earths (for example, the Tesla Model 3 production line once faced the risk of shutdown), but also ensures that rare earths are not used in the military field through real-time transaction data tracking systems. This strategy of "tipping candy at the same time" not only prevents US military-industrial enterprises from obtaining strategic resources, but also allows the US to taste the sweetness of cooperation and lays the groundwork for subsequent negotiations.
What is particularly noteworthy is the six-month validity period and inspection period mechanism. This time period just covers the three scheduled negotiation cycles between China and the United States (May, Switzerland, June, and July to be determined). If the United States lacks sincerity on issues such as chip sanctions and tariff reductions, China can tighten the gates at any time. As Reuters analyzed, the currently approved rare earth supply can only meet 30% of the demand of American car companies. This "half-sat supply" not only maintains the survival needs of American companies, but also forces them to continue to rely on Chinese supply.
Japan's actions in the fifth round of tariff negotiations between the United States and Japan have directly contacted China's strategic alert. Japan proposed to use rare earth processing technology output + third-country resource development to help the United States build a "de-Sinicization" supply chain, and even plans to jointly build icebreakers to develop Arctic rare earth resources. This attempt to shake China's rare earth hegemony prompted China to take countermeasures.
China's choice to relax restrictions on US companies at this time is essentially to use its market advantages to disrupt the US-Japan alliance. When American automakers can obtain rare earths through compliant channels, Japan's proposed alternatives immediately lose urgency. I believe everyone can understand this?
And Britain was laughing from ear to ear this time. Sky News Network directly called this round of talks a "diplomacy victory" for Britain. After all, since Brexit, Britain has not shown such a face on the international stage for a long time. It is no accident that the choice to talk in London was made clear. The British government privately calculated that it can not only take advantage of the east wind of "restarting relations with China" to refresh its presence, but also take the opportunity to advance the UK-US trade agreement. For example, cut the US high tariffs on 50% of the UK steel and aluminum products to give its own manufacturing industry a breath!
For the United States, the United States actually has no good choice. Because the United States wants rare earths so much, Rand Company evaluates that it takes 10-15 years and invests 10-15 billion US dollars to build a complete industrial chain, and it needs to break through bottlenecks such as environmental regulations (such as the Clean Water Act), labor training, etc. The Texas Round Top rare earth project is planned to meet 20% of the U.S. demand by 2027, but the current progress is lagging; although the Pentagon invests $439 million, local refineries are still in the drawing stage. In other words, the United States will not be able to build the rare earth industry chain in the short term, so it can only cooperate with China. #Certified Author Incentive Program#
