China’s Uncompetitive Trade Policies

By Heide B. Malhotra, Epoch Times
May 10, 2011 Updated: October 1, 2015    

TRADE BULLY: The MSC Vanessa cargo container ship arrives at the port of Hong Kong to make a port call in this file photo. China is aggressively pursuing the control of world trade, and already controls almost all of the world's trade in rare earth metals.(Laurent Fievet/Getty Images)
TRADE BULLY: The MSC Vanessa cargo container ship arrives at the port of Hong Kong to make a port call in this file photo. China is aggressively pursuing the control of world trade, and already controls almost all of the world's trade in rare earth metals.(Laurent Fievet/Getty Images)
China is aggressively pursuing the control of world trade, becoming more and more transparent in its effort to steamroll anything that threatens its ambitions.

The race for control is already well on its way. At this time, China already controls almost all of the world’s trade of rare earth metals.

“China controls about 95 percent of the global trade for the 17 minerals that collectively make up the rare earth metals market,” according to a 2011 article on the Fellowship of the Minds website.

It is not that China acquired the world’s rare earth metal mines, as they are on Chinese land, but it makes every effort to acquire mines in other countries. Then again, rare earth metals are found in the United States, in Canada, and according to the Pentagon, in Afghanistan. But only China is willing to mine these metals, while the others are not. The exorbitant production cost is claimed as the main reason.

Financial gurus suggest that China’s control of the rare earth metal trade “is mostly a result of low Chinese wages and lax environmental controls having made it unprofitable to mine the elements in other countries,” according to The Local, Germany’s English language local newspaper.

It is not at all as it seems, as experts suggest that China’s dominance over the rare earth metals trade could come to an end within a few years as companies look for alternatives to these metals. For example, development is underway that could make rare metals obsolete in the production of turbines and electric vehicles.

“Various researchers are working to develop new materials that require much smaller quantities of rare–earth materials, and for some applications, such as wind turbines and electric vehicle motors, alternatives already exist,” according a recent article on the RareMetalBlog.

Debate Versus Action

“As China continues its rise to becoming the world’s most prosperous economy, the U.S. government’s refusal to participate in the trade war between the two nations has cost the [U.S.] economy dearly and will only do further harm in the future,” said Sam Williford in a recent article on the Economy In Crisis website.

U.S. government agencies, including the Office of the United States Trade Representative, the Department of Commerce, and the U.S. International Trade Commission are ineffective when dealing with the thousands of trade violations committed by China.

Years of debate and so little progress due to inaction by the U.S. government is eroding the United States’s standing in the world of trade.

China’s intellectual property rights and indigenous innovation policy, which has been on the U.S.-China Economic and Security Review Commission agenda more than once, was also debated by the House Committee on Foreign Affairs in March and by many other government agencies and committees.

Expert testimonies before various government committees have repeated ad nauseam that America should get its act together, not kowtow to the Chinese, and not worry about possible retaliatory actions by the Chinese, but not many in our government have understood that America is still in the driver’s seat.

“It is clear that a China with a $273 billion surplus (2010) with the United States can only lose, and lose big, by any set of tit for tat retaliatory trade sanctions with the United States,” said former U.S. Sen. Thomas Slade Gorton III during his May 4 testimony before the U.S.-China Economic and Security Review Commission.

The decade-long trade crisis has cost the United States 5.5 million jobs and contributed to the shutdown of 50,000 manufacturing firms.

In 2011 thus far, the U.S.-China trade deficit amounts to $42 billion, while the total trade deficit for 2010 was $273 billion. In 2010, China exported to the United States four times more goods than the United States exported to China, according to numbers compiled by the U.S. Census Bureau.

The reasons for unbalanced trade between the United States and China lie in China’s protectionism through indigenous innovation and other policies, mercantilistic strategies, and exchange rate policies.

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