China using rare earth trade monopoly as weapon against competitors

With tensions rising between Beijing and the Joe Biden administration in Washington and Prime Minister Scott Morrison's government in Canberra, China is using its rare earth trade monopoly as a weapon against its rivals.

Critical minerals are in high demand as they power modern economies and help to manage climate change, but this could be cut off to Australia and its allies if tensions with China worsen, according to an expert statement.

To avoid China's debt-trap diplomacy, Japan's top diplomat in Australia, Yamagami Shingo, has warned Canberra that over-reliance on Beijing will lead to a severe economic crisis in the country.

Yamagami, who has been a top diplomat in Canberra for more than a year, indicated large investments by Japanese companies in Australian resources such as critical minerals and gas, according to The Singapore Post.

Previously, China was said to have sanctioned Australian exporters by imposing tariffs of up to 80% on barley.

This shift has prompted a leading think tank to declare Beijing's economic coercion campaign against Canberra a failure.

According to Roland Rajah, the economist and director of the international economic program, "if China's goal was to change Australian policy, impose economic damage, or send a warning signal to third countries about crossing Beijing, then it's safe to say that China has basically failed in all three accounts."

With an 80% tariff, Australian barley growers faced financial ruin because the tariff was imposed just after the barley crop was sown. Prices plummeted in the pursuit of the tax.

The market recovered significantly as a result of the Australian government's efforts to find another buyer in Saudi Arabia.

Only 33,000 tonnes of Australian barley were exported to China in October 2021, according to the Australian Bureau of Statistics. During the same time period, Saudi Arabia became the third-largest buyer, acquiring 1.5 million tonnes, according to The Singapore Post.

China is currently the world's largest supplier of rare earth elements, accounting for 70 to 88 percent of global production.

According to Dr. Wilson, China's monopoly on rare earth, which is in high demand for modern technology, has bestowed China with a truly powerful economic weapon.

In fact, China ceased supplying rare earth to Japan in 2010. China has recently warned that it may stop supplying the United States in the future. We can see China's relationships with countries such as Australia, Japan, the United States, and Europe.

According to The Singapore Post, China's relationship with the aforementioned countries has deteriorated in the last 12 months.

Similarly, coal exports were impacted by China's informal commodity export restrictions, according to the media outlet.

China is using its rare earth trade monopoly as a weapon against its competitors. According to Jeffrey Wilson, one of the research directors at the Perth USAsia Centre, China's superiority gave it an advantage over other countries' ability to reduce emissions or even equip their defense forces.

Finally, China remains Australia's largest market for agricultural goods, despite the fact that the supply chain has shifted. Traders want to survive, so they put politics aside and focus on what Australia has to offer.

The increased trade tensions have slowed Australia's economic growth, but alternative markets such as Saudi Arabia have been extremely beneficial, according to the report.