China using monopoly in rare earth materials to draw manufacturing jobs to China.

[dkf]

http://www.businessweek.com/news/2010-09-29/pentagon-losing-control-of-bombs-to-china-s-monopoly.html

A generation after Chinese leader Deng Xiaoping made mastering neodymium and 16 other elements known as rare earths a priority, China dominates the market, with far-reaching effects ranging from global trade friction to U.S. job losses and threats to national security.

The U.S. handed its main economic rival power to dictate access to these building blocks of modern weapons by ceding control of prices and supply, according to dozens of interviews with industry executives, congressional leaders and policy experts. China in July reduced rare-earth export quotas for the rest of the year by 72 percent, sending prices up more than sixfold for some elements.

--

Export quotas and taxes for overseas buyers that the GAO says can reach 25 percent are pushing up prices of elements even in relatively large supply. For example, the cost of a kilogram of samarium powder, needed for the navigation system of General Dynamics’ M1A2 Abrams tank, jumped to $34 in early September, from $4.50 in June, according to U.K. researcher Metal Pages Ltd.

The U.S. and the European Union consider Chinese restrictions on a range of raw goods part of a strategy to draw in higher-paying manufacturing jobs by making them cheaper to buy inside China. The export taxes violate World Trade Organization rules because China pledged to limit them to 84 product categories when it joined the trade group in 2001, said Terence Stewart, managing partner of Washington law firm Stewart & Stewart. In 2010, China had taxes on 329, he said.

[dipsydoodle]

1. Yup

Life's a bitch......... Looks like they made the right decision a generation ago. Sure beats funding unnecessary wars.

[dkf]

2. Our Long term strategy is the next election. Their's is generational.

[dipsydoodle]

3. Good assessment

:hi:

[Mimosa]

4. That's what they do. Smart people.

Thanks for the article. :)