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Politics, markets, and rare commodities: responses to Chinese rare earth policy

Published online by Cambridge University Press:  05 December 2018

Kristin Vekasi
Kristin Vekasi*
Affiliation:
Political Science and the School of Policy and International Affairs, University of Maine, USA
*
Corresponding author. Email: kristin.vekasi@maine.edu
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Abstract

This paper examines economic statecraft in the case of rare-earth elements, of which China controls over 90% of the world's current supply, and famously cut off exports to Japan during a territorial dispute in 2010. The rare-earth sanctions provide an opportunity to investigate claims of economic statecraft, power and interdependence, and the political implications of near-monopoly control of a resource critical for high-tech military, consumer, medical, and environmental industries. A vector error correction model statistically disentangles the effects of China's economic statecraft from their rare-earth quota and pricing policies. Prior to the sanctions, there was little international supply diversification. China's purported use of rare-earth elements was an economically costly diplomatic signal that demonstrated their potential leverage, but also had unintended consequences, as Japan moved to diversify rare-earth supplies and in doing so deepened diplomatic ties with China's neighbors. Economic statecraft served to heighten regional tensions and undermine the China's own end goals.

Keywords

Chinaeconomic interdependenceJapanrare-earth metalsresource nationalismsanctions
Type
Research Article
Information
Japanese Journal of Political Science , Volume 20 , Issue 1 , March 2019 , pp. 2 - 20
Copyright
Copyright © Cambridge University Press 2018 

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