Here’s the update, per the New York Times:
The Chinese government on Thursday abruptly ended its unannounced export embargo on crucial rare earth minerals to the United States, Europe and Japan, four industry officials said.
The embargo, which has raised trade tensions, ended as it had begun — with no official acknowledgment from Beijing, or any explanation from customs agents at China’s ports.
Rare earths are increasingly in demand for their use in a broad range of sophisticated electronics, from smartphones to smart bombs.
Having blocked shipments of raw rare earth minerals to Japan since mid-September, and to the United States and Europe since early last week, Chinese customs agents on Thursday morning allowed shipments to resume to all three destinations, the industry officials said.
Note that while the ban has been reversed, the supply interruption has led to a price spike, and that may persist if China keeps supplies tight. From the Times:
Even with containers of rare earths once again leaving China’s docks, foreign buyers still face potential shortages. As China’s own industrial needs for rare earths have grown, Beijing has repeatedly reduced its export quotas for the minerals over the last five years. So even when China is shipping its full quotas, the outbound supply is now well below world demand.
Moreover, the tight export quotas have caused world prices to soar, even while holding steady in China.
There are two different ways to read this little contretemps, and readers can no doubt come up with other interpretations:
1. This was a successful shot across the bow of the US (the initial Japan freeze was in many ways directed as the US as welll because the US consumes far more of Chinese rare earths via Japanese intermediate and end products than via direct purchases from China, even if the immediate impact on Japan was more pronounced). The Treasury has backed off its pressure on China to have the renminbi appreciate more quickllyand is now supporting the idea of China coming up with longer term goals to rein in its trade surplus
2. This was a shot across the bow that failed. China only banned raw materials exports; it wanted to
forceencourage its trade partners to buy products manufactured in China with rare earths content. But instead, Japan immediately started to focus on recycling rare earths and redesigning products to use less of them; the Eurozone similarly started to consider accelerated development of alternative sources, rather than buying higher value added goods from China. This seems consistent with the fact that Secretary Clinton was make remarks about the ban; it was dropped literally hours before her speech, but the State Department has not gotten confirmatoin.