#1 CHINA BANS EXPORTS OF RARE EARTH TECHNOLOGIES
#2 CHINA CURBS BIGGEST GAMING COMPANIES
#3 BELT + ROAD INITIATIVE IN INDONESIA
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CHINA BANS EXPORTS OF RARE EARTH TECHNOLOGIES
THE FINANCIAL TIMES
“China has banned exports of technologies for processing rare earths, the latest sign President Xi Jinping’s administration is hitting back against US-led curbs on advanced computer chip sales to Chinese companies. The new controls risk further straining geopolitical tensions between China and the US and its allies over control of global resource and technology supply chains. For many in the west, they will also underline China’s dominance over large swaths of the world’s important resources.
China controls the lion’s share of the supply chain for rare earths, key materials used in clean energy and defence products. The Commerce Ministry in Beijing said on Thursday it was banning the export of technologies used in rare earth extraction and separation and in some rare earth magnets. It gave no immediate explanation for the move. The ban comes after Chinese officials this year started requiring additional export permits for gallium, germanium and graphite, materials whose supply is largely controlled by Beijing and which are key to technology manufacturing.
Chinese officials have in recent months stressed national security as the main reason for the controls. However, many experts see them as evidence Beijing is leveraging its dominance over global clean technology supply chains to fight back at trade restrictions that have been expanded by the administration of US President Joe Biden.
Under Biden, Washington’s controls have widened from sales of cutting-edge chip technology to China to increasingly blocking Chinese battery and electric vehicle producers from accessing generous US government subsidies. According to the International Energy Agency (IEA), China accounts for about 60 per cent of the world’s rare earth mining production, but close to 90 per cent of processing and refining. Policymakers in Washington and Brussels have long been concerned about over-dependence on China for rare earths and many of the other materials and resources used in clean technologies.
With heavy government support, non-Chinese production of rare earth oxides jumped almost fourfold to 90,000 tonnes over the seven years to 2022, according to US data. But China has maintained its dominance, doubling its own production to 200,000 tonnes. The IEA also forecast global demand would increase by as much as seven-fold over the two decades to 2040, underpinned by the world’s transition from carbon-intensive energy production and transport towards cleaner electricity generation and electric vehicles. The agency noted that countries typically took more than 15 years to develop mining projects from discovery to first production, raising doubts about how fast the West might be able to disentangle itself from Chinese critical minerals supplies.
GRAHAM PERRY COMMENTS;
What are Rare Earths and why are they so important?
Rare earth elements (REEs) are an essential part of many high-tech devices. The U.S. Geological Survey news release explains:
“Rare-earth elements (REE) are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions. Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems.”
So Rare Earth Elements (REEs) are very important. In 1993, 38% of world production of REEs was in China, 33% in the United States, 12% was in Australia, and 5% each was in Malaysia and India. Several other countries, including Brazil, Canada, South Africa, Sri Lanka, and Thailand, made up the remainder.
However, in 2008, China accounted for more than 90% of world production of REEs, and by 2011, China accounted for 97% of world production. Beginning in 1990 and beyond, supplies of REEs became an issue as the Government of China began to change the amount of the REEs that it allows to be produced and exported. The Chinese Government also began to limit the number of Chinese and Sino-foreign joint-venture companies that could export REEs from China.
What is happening today is very important to the efforts by the US to curb China’s economic development. This phase of China-US antagonism began at the end of the Trump Presidency when Secretary of State Pompeo went onto the offensive against China. First the US imposed big tariff increases on Chinese goods entering the US in an effort to hurt China and, second, the US made allegations of genocide against China in relation to the Uighurs in Xinjiang Province in an attempt to turn world opinion against China. This ratcheting up of pressure on China was maintained by the Biden administration. China became Enemy # One.
Rare Earth is at the heart of the China-US conflict. China is protecting itself against determined US attempts to restrain China’s economic progress.
The leaders – Xi Jinping and Biden – can exchange smiles for the cameras when they meet but in reality there is an ongoing battle well underway as the US pursues its policy of trying to bring China to heel. Reagan brought Gorbachev to heal and forced the end of the USSR. Biden is trying to do the same with Xi. But, as this column has previously stated, the China of today is more balanced, more determined and more successful than the USSR of yesterday. Big changes are taking place and Washington does not like them.
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#2 CHINA CURBS ITS BIGGEST GAMING COMPANIES
NIKKEI ASIA
“Shares in China’s biggest gaming companies plunged in Hong Kong on Friday after Beijing issued draft regulations aimed at curbing players’ spending, with $46 billion wiped off Tencent Holdings’ market capitalization.
All online games will be required to set limits on users recharging their accounts, and pop-up alerts should be used to warn and remind users of “irrational spending,” according to the draft rules issued by the National Press and Publication Administration, China’s gaming regulator.
In addition, game publishers will be required to have their “technical equipment, servers, and storage devices” located in China.
Online gaming providers would also be barred from offering inducements such as daily login rewards, first-time recharge rewards and consecutive recharge rewards. They would also be prohibited from “hyping up” high-priced transactions of virtual items, according to the draft rules.
Tencent’s shares ended Friday down more than 12%, while rival NetEase fell more than 24%, taking $16.4 billion off its market capitalization. The benchmark Hang Seng index, of which Tencent is one of the top weighted stocks, was down 1.69%.
Restrictions on features like encouraging players to log on are not a big concern, an executive from a listed gaming company told Nikkei Asia. The most critical issue, they said, is the clause to curb recharges.
“It is unclear whether it is solely aimed at minors or also applies to adults,” the person said, “but it looks most likely to restrict adult recharges.”
Vigo Zhang, vice president of Tencent Games, sought to play down the impact of the proposed rules.
“Currently, the game duration and spending on Tencent games by minors are at their lowest levels in history. The proposed draft, which is open for public comment, does not fundamentally change key elements such as reasonable business models and the operational pace of the gaming industry,” he said. “Tencent Games will continue to uphold a strategy centered around technological innovation and cultural leadership, while actively promoting the high-quality growth of the Chinese gaming industry with the support of the regulatory authorities.”
NetEase did not immediately respond to Nikkei Asia’s request for comment.
“We view the draft as unexpected by the market as game approvals are back to normal and protection of minors is in place,” said Thomas Chong, equity analyst at Jefferies in a note. He added that the industry has been “promoting healthy sector development” and noted that the draft is still at the consultation stage. “More colour is needed about the spending limit in the proposal,” he said.
In the past two years, Beijing has inflicted pain on the industry multiple times in the name of curbing gaming addiction. China suspended approvals for new games in July 2021 without giving a reason for or even officially acknowledging the decision. Chinese regulators resumed monthly gaming approvals in April 2022 after an eight-month freeze that dealt a blow to developers. Tencent and NetEase failed to receive any approvals until August of that year.
The draft rules come ahead of Chinese students’ winter holidays.
The administration is inviting public feedback on the draft regulations until Jan. 2”
GRAHAM PERRY COMMENTS;-
This initiative by the Government of China is about curbing gaming addiction – about protecting the Chinese people from being drawn into the web of reckless personal spending. This move by the Government hurts gamblers because it restricts the amounts of money they can gamble away. But it also hurts the Government because it reduces the tax income the Government gains from the gambler companies. So, if it hurts the gamblers and the gambling companies and the Government itself, why has China introduced this big economic hit.
China has made its move in order to protect its people from their own weaknesses, their own indulgences, and their own hopes of raising their income levels. The gaming companies – Tencent and Net Ease and others – know they have to pay a price for encouraging people to gamble irresponsibly. The companies know that the people of China enjoy “a flutter” but the Government move is to prevent “a flutter” from becoming an addiction. We see similar problems here in the UK where the gambling companies have postured in an attempt to show concern for heavy gamblers by urging customers to “gamble responsibly”. But Governments in China and the UK know that people in both countries can gamble irresponsibly. Now the Chinese Government has acted.
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#3 CHINA’S BELT+ROAD INITIATIVE BRINGS HIGH SPEED RAILWAY TO INDONESIA
NIKKEI ASIA
Two months after its opening, Indonesia’s high-speed railway is off to a strong start, increasing service frequency and maintaining occupancy above 80%. Riders are impressed with train technology from China, suggesting this may lead to a change in locals’ mostly unfavorable attitudes toward that nation.
In early December, Halim station in Jakarta was crowded with people taking pictures of a train arriving at the brand-new platform. Departing the station about 5 minutes behind schedule, the train reached just under its top speed of 350 kilometers per hour in about 10 minutes.
With low noise and vibration levels, some passengers were admiring the ride. “I can’t believe we’re going this fast,” said one rider.
Opened in October the so-called Whoosh railway connects the capital city of Jakarta to Bandung, the West Java provincial capital about 140 km away. Indonesia had initially considered tapping Japan’s shinkansen bullet-train technology, but changed course at the last minute and picked a Chinese company instead. Construction of the project, under Beijing’s Belt and Road Initiative, took seven years to complete.
Whoosh’s service frequency has improved from eight trains a day initially to 40 trains on a weekday. Average train occupancy from the opening to early December hit 85% to 90% during the week and exceeded 90% on weekends, the rail operator said.
Passengers can book and pay for tickets online, and can enter the platform by simply showing the QR codes on their phones. Local media has given high marks to the railway’s advanced facilities as well as Chinese technology that combines both high-speed and low-noise levels.
During construction, opening delays and cost overruns provoked unfavourable feelings toward China. Demonstrations also erupted, protesting a huge influx of Chinese workers.
Asked if China contributes to international peace and prosperity, a majority of Indonesians gave a negative response in a survey by Singaporean think tank ISEAS-Yusof Ishak Institute.
But such feelings may be shifting.
“The opening of the railroad will help improve Indonesian trust in China,” one passenger said recently. With Indonesia asking for Chinese support for a railway extension and the bilateral economic ties growing stronger, the launch of the rail service is starting to have an impact on how Indonesians view the world’s second-largest economy.”
