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Friday, July 19, 2024

Politburo Meets re Big Business

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Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

In trade relations countries are sometimes strong and sometimes weak. A current focus in relations between China and the EU is Rare Earth – a key raw material in the manufacture of the magnets that run electric vehicles. China supplies 98% of the EU’s rare earth. Option for the EU? – diversify and decouple.

Not so easy to achieve. First EU environmental + social regulations deters mining. Second, supply chains for rare earths are hard to diversify. Third, production involves mining, concentrating, separating and processing.

China already has “mine to magnet” chains for its components; it is also advanced in electric vehicle manufacture. Additionally China has seen the EU challenge coming for a long time. It is prepared.

The EU has a problem. It is working hard on its alliance but Beijing has the advantage re low costs, less vigorous environmental standards, and state support.

China’s dominant position underlines the requirement that trading blocs work in co-operation not conflict in order to provide balanced trade and investment in all economic relations. US/UK/EU prefers belligerence. It comes at a cost.

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