China Embargoes Natural Resources but Not Semi Processed Alloys

Interesting piece along the lines of a previous post on proposed export ban on natural resources.

China has overtaken Japan and is now the world's second largest economy and Japan’s number-one trading partner. China also mines 93 percent of the world’s rare earth minerals, and more than 99 percent of the world’s supply of some of the most prized rare earths. 

In a recent spat however, the Chinese government reportedly blocked exports and shipments to Japan, of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles, sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, who was subsequently released.

However no discriminatory ban was imposed on the export to Japan, of semi-processed alloys that combine rare earths with other materials. China has been trying to expand its alloy industry to create higher-paying jobs in mining areas, instead of exporting raw materials for initial processing. 

Legality?

Publication of government regulations or other official pronouncements barring exports from China would reportedly allow Japan to file an immediate complaint with the World Trade Organization, claiming a violation of free trade rules. But an administrative halt to exports, by preventing the loading of rare earths on ships bound for Japan, is much harder to challenge at the W.T.O. This is possibly because there is no formal directive.

On general export controls, the Japanese media has also reported that China has repeatedly rejected Japan's requests for Beijing to consider lifting its export controls on rare earth material. Beijing has cited national security concerns and the protection of natural resources for its export restrictions. It has also argued that the export controls do not violate World Trade Organization rules. Chinese officials also pointed out that there are other countries that export rare earth minerals and that Japan should diversify its sources.