Exports

By Will Freeman

Will Freeman is a staff member of Dragonomics Advisory and is a guest contributor to Dragonbeat blog this week.

China’s rare earth miners, if you believe a flurry of recent newspaper articles, have the world’s producers of high-tech equipment by the short and curlies.

A draft plan by China’s Ministry of Industry and Information Technology (MIIT) to ban exports of certain rare-earth metals has fuelled fears of an impending global shortage of high-tech products reliant on these metals.

Although MIIT now assures that no such ban will be enforced, high-tech producers remain nervous. Rare-earth metals are used to make vital components in wind turbines, electric cars and a host of electronics appliances.

Our advice: don’t panic.

By Tom Miller

When the global financial crisis began to batter China’s exports, some Chinese officials saw it as a useful opportunity to dispense a large dose of bitter, but necessary, medicine.

Wang Yang, the Communist Party boss of Guangdong province and a confidant of China’s president Hu Jintao, clearly relished the chance to fulfill the province’s long-held ambition to replace low-end manufacturing with something bigger, more advanced and more “modern”.

“Without the current serious economic situation, it would be much more difficult for Guangdong to accomplish economic restructuring,” Mr Wang informed the local press.

Mr Wang called the plan to dump labour-intensive manufacturers and replace them with higher-value heavy industry and services “emptying the bird cage for new birds to settle down”. It sounded like a fine idea – so long as the new birds were ready.

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