China vows not to use rare earths as leverage

The Chinese, equally adroit at using the media to confuse their intentions, continue to push around investors. You’d think they would have adapted to their tactics from their oscillation between loving and hating gold. I serious doubt the Chinese had any intention of cutting off supply as a tool for political leverage. They already have all the leverage they need through massive US Treasury purchases.

Does this mean the Chinese, whom control 97% of rare earth supplies without meaningful competition from western sources, are about to start selling them at cost around the world? There’s an easy no. The Chinese will likely use the monopoly power to control price. Price, not restriction of supply, can alter competition within the high technology manufacturing space while maintaining what they view as win-win outcomes.

Besides, next week they'll suggest curtailing supply again.

The U.S. and European Union this week said they were pressing for solutions to fears that China was choking supply of the substances used in lasers, computers and superconductors, among other applications, and the issue is expected to figure at next month's G-20 summit.

"China will not use rare earths as an instrument for bargaining," he told a news conference on Thursday. "Instead, we hope to cooperate with other countries in the use of rare earths on the basis of win-win outcomes and jointly protecting this unrenewable resource."

Source: newsdaily.com