Rare Earth Elements: China Imitating Walmart… and Why It’s Important for the Present… and the Future….

I have been wanting to finish this post for a while…. Rare Earth Elements….

Rare Earth Elements are necessary for consumer electronics… catalytic converters… and guided missiles and drones….

Basically… bottom line… China essentially has a monopoly….

How did they get to the point that they controlled the market…?

By imitating Walmart…. First… they produced the products more cheaply than anyone else…. Then they saturated the market…. Everybody loves cheaper stuff… particularly when their needs are being met…. So… all of the competitors shut down production….

How much of a monopoly does China enjoy? Here’s an article from the Russia Times… so you don’t think I’m just one of those crazy, conspiracy spewing religious nut-job Right Wing White Guys…. (I am… but….)

http://rt.com/business/production-china-rare-metals-402/

So… what does any self-respecting monopoly do…? They act like Walmart! They squeeze the producers and use the products to obtain competitive advantage…. Which is why China’s monopoly is down to a mere 97%. Because other countries are beginning to ramp up production again. Because the prices have gone up and producing them is now very profitable again. But China has a decade to continue their monopoly.

Here is an article about Japan’s efforts to find and mine REEs: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9951299/Japan-breaks-Chinas-stranglehold-on-rare-metals-with-sea-mud-bonanza.html

That may remind you of some of my other recent postings…. China’s aggressive Imperialistic actions in the East China Sea against Japan and South Korea and the South China Sea against the Phillipines and Vietnam and all of the other members of ASEAN….

Let me tie two-and-two together through a different direction….

Hint: China doesn’t just control its own Natural Resources…. North Korea also has supplies of REEs…. And they may have played a part in the sudden demise of their young leaders uncle… who was #2 in the chain of power…. Interesting what was said about the reasoning behind the treasonous acts…. Seems the naughty uncle was tight with the Chinese…. Establish trading relationships that sent Natural Resources to China… at a discount….

http://www.reuters.com/article/2013/12/13/us-korea-north-idUSBRE9BB19520131213

You might think I’m making this up…. But… North Korea just happens to have discovered the largest REE assets in the world….

http://www.mining.com/largest-known-rare-earth-deposit-discovered-in-north-korea-86139/

That’s the future for North Korea’s economy…. The North Korean economy used to be bigger than South Korea’s… before Communism….

Mongolia is also an up-and-coming economy… because it has vast supplies of Rare Earth Elements…. http://english.esdalanzurgaa.mn/2011/07/29/rare-earth-elements-not-so-rare-especially-in-mongolia/

Buried in that last article is an interesting aside…. Some Chinese fishermen rammed a Japanese boat in the disputed East China Sea…. The fishermen were arrested and taken to Japan to stand trial…. The response of Beijing…? Cut off all Rare Earth Element shipments to Japan! Economic warfare….

We know that China has Cyberwarfare Units in the People’s Liberation Army that have attacked the American Government and other private interests… and conducted Industrial Spying to gain valuable information on Military Technology and other high value targets…. North Korea has similar irregular forces….

http://rt.com/op-edge/us-china-cyber-espionage-371/

Honestly…. What our NSA has done to foreign governments and American citizens really puts us in a position where we have handed China the moral high ground… which is unfortunate….

But… let me get back to a more important issue….

The current American debt has surpassed 100% of Gross Domestic Product under the Obama Administration. That level of debt is unsustainable… because the service on that debt becomes unserviceable…. The interest payments become too large…. The usual way that countries who utilize Keynesian Economics handle that… is to devalue their currency…. Make the value of YOUR currency artificially lower than other nations, so that it’s more expensive for your citizens to buy imports and cheaper to sell exports…. The result is what grew to be called “Bugger-Thy-Neighbor” Economic Policies…. Here’s an explanation: http://frozenpeafund.com/understanding-beggar-thy-neighbor-as-a-monetary-policy/

Now… when they talk about “expansionist” policies and “competitive devaluation” and “moving away from the gold standard”… what they mean is printing more money…. That’s the same thing as Quantitative Easing…. Which America is doing right now…. And China has done for years… to maintain their export advantage against Europe and America and Japan and South Korea and Taiwan…. But everyone attacks Japan when they do the same thing….

If ANYONE needs to increase exports… it’s Japan…. Their national debt sits at about 225% of their GDP…. And the Earthquake and Tsunami killed their productivity…. Toyota… who brought us the productivity improvements of the Toyota Production System and 6 Sigma and Just-In-Time delivery that minimizes warehousing and improves efficiency because it eliminates stockpiles…. Well… that all fell apart….

Now… allow me to wrap up… what I mean by China imitating Walmart….

Walmart is ruthless at using competitive advantage to destroy competitors…. That’s why they use so many part-time minimum wage employees…. Save them overhead costs in unskilled labor jobs because labor is the greatest expense of any business…. Walmart owes it to their stakeholders to improve efficiency and productivity while minimizing expense…. That’s why people invest in companies and why companies are formed…. To make as much money as possible…. EVERYONE profits when that happens…. The consumer…. The employees…. Management…. Investors…. And the government….

China runs a bit differently. Walmart competes against other retail companies. China competes against other economies…. China has emerged as State Capitalist Economy out of a State Communist Model…. In reality, they were never truly Communist because they had a strong central authoritarian government, which is technically the definition of a Fascist State… but I won’t quibble…. China’s national debt is around 26% of GDP… down from 33.5% maximum in 2011… and was never above 20% before that spike…. That’s because Communism is rooted in Anarchy and adamantly opposes the production of profit through any means other than work…. No lending. No borrowing. No stocks. No rent. No private ownership. China and Russia have embraced Capitalism for one reason and one reason only…. It WORKS!!! They understand the Psychology behind the motivation of reward…. That is what the entire State Capitalist Economy of China is geared towards…. Being the GREATEST Economic Power in the world….

China REALLY is incensed that America borrows money from China to provide for the lifestyle of its people. China sees such acts as frivolous…. Worse than frivolous…. Decadent….

Chinese citizens are flocking to America to invest in land…. Casinos…. REAL Property…. Because they can’t use their money that way in China… not to the same extent… not with the same financial freedom….

But… it’s the NATION of China that holds most of the U.S. Treasuries…. An investment which has artificially kept the interest rates in America low…. So we can afford to buy more Chinese products…. But now… we have passed the tipping point…. And China… essentially controls America’s economic destiny…. All they have to do… is sell our debt…. The price they get would plummet…. And the interest rate we have to pay would shoot up… like what happened in Greece and Ireland and Spain and Portugal and Italy….

And when that’s profitable to China… they will….

In the mean time… they’ll hone that skill with Japan….

China would like nothing more than to call in their debt and crush

 

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One thought on “Rare Earth Elements: China Imitating Walmart… and Why It’s Important for the Present… and the Future….

  1. Pingback: Rare Earth Elements: China Imitating Walmart… and Why It’s Important for the Present… and the Future…. | Wright-Wang Extreme Mystery, Inc.

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