New tensions are rising in Sino-American relations, and with them competition for technology-related resources and a number of regulations.

I had the opportunity to talk the other day to some people involved about Japan's position as a buffer zone between the two countries, and I would like to briefly summarise the content.

 

High industrial dependence on rare earths and rare metals

 

China began to increase its market value when it attracted attention as a producer of rare minerals such as rare metals and rare earths, which are materials necessary for the production of high-tech products.

In particular, the amount of rare earths produced is so overwhelming that existing high-tech products would not be possible without them.

Therefore, even when pursuing traceability of products originating from China, Western countries could not take a strong stance when considering how many products would be impossible to manufacture without rare earths.

Western countries are increasingly searching for veins of rare earths and rare metals in their own waters or in neighbouring countries.

However, the amount of these resources is still far from enough to sustain a market without China, and as a result, as long as they continue to produce these products, they will be dependent on China's mineral resources.

Of course, without Chinese sellers, rare earths would be wasted.

Ideology and principles aside, the current a ' give-and-take' relationship is at the root of the Sino-US trade relationship.

 

Confused trade situation

 

The IRA, the Inflation Restraint Act, was launched by the US last year. The impact of the enactment of this legislation is big in the world.

The bill also includes an outline for electric vehicles, with the following requirements causing concern.

The four requirements are: the price must be less than USD 55 000 (USD 80 000 for some models); final assembly of the vehicle must take place in North America (US, Canada and Mexico); 40% of the procurement value of critical minerals for battery materials must be mined or refined in a country with a free trade agreement or recycled in North America.  '50% of the battery components must be manufactured in North America'.

Of these, the proportion of the procurement price of key minerals is to rise to 80% by 2027, and the proportion of final battery components is to rise to 100% by 2029.

 

Meanwhile, in China, demand for electric vehicles has been growing rapidly in recent years.

The supply is growing due to the abundance of raw materials, but in cold regions, hybrid vehicles are more user-friendly than electric vehicles.

Therefore, for the domestic Chinese market, electric and hybrid vehicles are expected to be in demand in parallel.

Exports of vehicles to the USA are likely to be a difficult trend, but the country is a huge market with a total population of more than one billion.

Furthermore, Japan has close relations with Southeast Asia and Russia, and trade is thriving, so the market is unlikely to waver.

 

Based on this, Japan is not a resource country and naturally imports many resources, including rare earths from China.

As for the aforementioned IRA, it is difficult to nod its head so much when its own industry is dependent on the material-producing countries.

In particular, automobile manufacturers that produce vehicles for the US market in Japan must find a way out of this situation at any cost. 

It cannot be said that there will be no possibility that they will be driven to another dimension where they will have no choice but to develop new markets.

 

A location that truly makes the most of its “give and take”

 

Recently in China, the government authorities and the State Rations and Supplies Reserves Bureau (SRB) have been further stockpiling important minerals such as rare earths and rare metals, and nationalising companies.

Of course, this move has been seen for some time, but recently it has been suggested that it may spread to other materials as well.

This is partly because China is also a resource-importing country.

 

Although China has overwhelming reserves of rare earths, this is not necessarily the case for rare metals.

Cobalt is mined in the Democratic Republic of Congo, tantalum in Rwanda and platinum and manganese in South Africa, all of which are conflict minerals mined in areas where conflict continues.

Without them, even if you have rare earths, they cannot be used to produce batteries.

 

The use of these materials is the same everywhere where batteries are produced, and of course Japan, like China, is an importer of these minerals.

In contrast, Japan has a certain degree of influence over Europe and the US, but China is in a position where this cannot be said.

Naturally, Japan is geographically much closer to China than the US, and the impact of the two countries on each other is at a level that cannot be ignored.

On top of that, Japan does not currently have the economic power to ignore the economic blocs of China, neighbouring Russia or South East Asia, which have populations in excess of one billion.

And if the IRA is enacted here, the option of "distancing" itself from the US market is also possible.

 

Some people involved in the talks say that it would be better for Japan to negotiate from an independent standpoint, not by choosing sides in the current confrontation between the US and China, but by staying in a mutually beneficial relationship with neither side.

If the current situation excessively inflames the Sino-American conflict, it could result in Japan closing the pipeline of business with China, its closest major customer.

Also, as mentioned earlier, neither the US nor China can ignore each other's markets.

In short, Japan should develop a literally independent diplomacy, building economic blocs in cooperation with China and, by extension, its neighbours, as well as with Western countries, including the US.

 

Of course, If this had been the bubble economy period, there would have been a different way of thinking, but with the current cooling of the Japanese economy, it would be wiser to find a way to cling madly to it rather than to maintain the policy.

There is a strong possibility that an opportunity will arise when Japan will need to make its position clearer and show its presence to the world, rather than getting caught up in the middle of a confrontation axis.

In an increasingly polarised world, how will Japan, a country that was once renowned for its technology, consider to conduct itself? The time may have finally come to think about this as we watch the price of rare minerals soar. 

 

Japanese site is here

 

 

(iruniverse ichimura, translated by mk)

 

 

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