beyondbrics

For an authoritarian state, China is remarkably bad at getting what it wants sometimes. Beijing has been vowing for years to crack down on illegal, inefficient, highly polluting small steel producers, for example – with very little discernible effect.

Now Beijing is stepping up the rhetoric against illegal producers of rare earth elements, of which China supplies 95 per cent of the global market, in a bid to tighten its grip on the valuable minerals used to produce everything from hybrid cars to iPod music players, to lasers and high-powered magnets for the US military.

Deng Xiaoping, the former Chinese leader, once said that while the Middle East has oil, China has rare earths.

But so far, Opec-style discipline has wholly eluded the Chinese. Instead of hoarding its scarce and valuable resources, China instead flooded the world market with cheap rare earths for more than a decade. Now Beijing wants to conserve them to ensure that it has the commodities it needs to feed its own ambitions to build advanced and green technology industries such as electric vehicles.

So the Ministry of Land and Resources is saying that it will demolish construction, confiscate equipment, cut off water, power, explosive supplies, and whatever else it takes to stop unlicensed exploration and mining of rare earths. (It also wants the sector to consolidate, a frequent litany in the Chinese car industry too – where, pace Beijing, there are still over 100 car makers).

Good luck to the rare earth police: where there is a buck to be made illegally in China – especially in the mining sector – someone usually figures out a way to make it. Local governments – the only ones able to monitor production closely – are often reluctant to step in, because cracking down will hurt employment (or in many cases their own pocketbooks, if they are getting paid to turn a blind eye).

Pity the Beijing bureaucrats. They have plenty of good ideas about conservation and environmental protection, and such like. But just like Beltway bureaucrats half a world away in Washington DC, they often find they have more power than influence.