It’s no secret that China has cornered the market on manufacturing, particularly that of cutting-edge technology such as Apple’s iPad and iPhone. But just why this is so seems to require more of an answer than just China’s cheap labor, neighboring Asian countries such as Vietnam and Thailand boast similarly low-cost and highly motivated work forces but fail to attract high-tech manufacturers at a similar rate. Another more comprehensive answer suggests that China’s flexible and dedicated manufacturers may be more efficient than that of competing nations, but it still may be missing key details. An article by Elizabeth Chamberlain suggests that China’s near total monopoly on rare earth elements may play a significant role in luring electronics companies into doing business in the country.
Rare earth elements are found in nearly all modern consumer electronics, and as demand for everything from smartphones to televisions continues to grow so does demand for these minerals. Controlling an estimated 95-97% of all rare earth minerals, China has nearly total say over their distribution and has elected to increasingly restrict access to the domestic market through tight export quotas. For the moment this means that American electronics companies find it more expedient to base their manufacturing in China and thereby skirt export quotas. In the face of a potential rare earths shortage, the United States has already lodged a complaint about China’s rare earth trade policies with the World Trade Organization.
Do you think growing attention and resistance to China’s domination of the rare earth minerals market will alter the growth of the country’s manufacturing sector? Or do you think that this is only one small piece of the Chinese business package?
About the Author
Ashton Adams was an intern at the IRC during the summer of 2012. This post was republished from an article Ashton originally wrote for the IRC blog on May 21, 2012.