The "Merchant" Presidency Meets the State Official in Rare Earth Transactions, Socialist Modernization, and Market Access; What Can Go Wrong?

 

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It has become the habit of states to engineer some sort of drama on the eve of meeting between high officials. Perhaps this is derived from some sort of remnant of the instinct of animals that retains a place somewhere on the human psyche. So it appears that this pattern retains its vibrancy in the run up to the scheduled meeting between Presidents Trump and Xi.  

China dramatically expanded its rare earths export controls on Thursday, adding five new elements and extra scrutiny for semiconductor users as Beijing tightens control over the sector ahead of talks between Presidents Donald Trump and Xi Jinping.
The world's largest rare earths producer also added dozens of pieces of refining technology to its control list and announced rules that will require compliance from foreign rare earth producers who use Chinese materials. (Reuters here)

Traditionally, American officials have tended to be somewhat measured in their responses--assuming that any sort of response is to be made other than through some sort of  performance for the press and the masses. This time, however, the response from the Americans was fairly swift, and entirely transactional. It's essence, in the manner of communications in this century, was not delivered from the press officers of institutional state organs, but through the Truth Social web site, and it appears above. In addition, the President "added that he had planned to meet Mr. Xi in two weeks at an international economic conference in South Korea, “but now there seems to be no reason to do so.” (New York Times here).

The issue has been brewing for some time and may be understood as part of a broader negotiation strategy that pairs the availability of rare earths with the availability  of chipmaking equipment, as China and the United States each seek to advance their own interests and cause damage to the interests of their rivals. . .

The Ministry of Commerce's announcements follow U.S. lawmakers' call on Tuesday for broader bans on the export of chipmaking equipment to China.
They expand controls Beijing announced in April that caused shortages around the world, before a series of deals with Europe and the U.S. eased the supply crunch.
"The White House and relevant agencies are closely assessing any impact from the new rules, which were announced without any notice and imposed in an apparent effort to exert control over the entire world's technology supply chains," a White House official told Reuters on Thursday.

This drama will play out over the course of the next several weeks. No doubt some sort of resolution will be cobbled together "at the last minute."  The only thing worth noting at this point is that scarcity ought to breed innovation. A failure to innovate around the need for rare earths, at this point, makes for foolish U.S. policy even as in the short term it engages in transactions to secure them to feed its  industries. And of course, the race for rare earth exploration will intensify in the meantime, the price of components that use rare earths will increase, and its effects on advances in tech based processing, including data consuming programming, remains unknown.