A miscalculation that, if not as portentous as the situation after Pearl Harbor—encapsulated in the quote attributed to Admiral Yamamoto (he probably didn't say it in so many words but had expressed similar beliefs elsewhere) is similar:
"I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve"
What China did is remind the West of their choke hold over the supply chain, a reminder of what they did to Japan last decade, and that reminder could very well lead to a rare earths Manhattan Project to scour the planet for supply and bulldoze through any red tape inhibiting processing.
From Foreign Policy, October 24 i.e. before today's Trump - Xi agreements:
China’s complex new rules take on the entire world at once—and give Trump an opportunity.
The current trade confrontation between the United States and China may look like a repeat of the episode from earlier this year: Washington has rolled out sky-high tariffs, while China has clamped down on the supply of rare earths. Many observers, reportedly including Chinese President Xi Jinping, expect the outcome will be the same, too: markets slide, American manufacturers warn of shuttered factories, and U.S. President Donald Trump backs down.
Yet if Trump plays his cards right, Xi may find he has miscalculated. Several big factors that hurt the United States in the spring are now playing in its favor. For starters, China’s complex new rules will be far harder to enforce than its earlier restrictions. The global scope of those rules also means that this time, it is Beijing, not Washington, that has escalated first—and done so by taking on the entire world at once. That gives the Trump administration a chance to build an international coalition, rather than facing one itself. Meanwhile, one of the main drivers of Trump’s earlier walk back, the U.S. bond market, is far more quiescent than it was in April.
Alongside those advantages, the Trump administration and U.S. allies have far more effective responses than Trump’s proposed tariffs, which will hurt the U.S. economy as much as China’s. Plausible options include curbing China’s tech sector, limiting low-value Chinese imports, and going after companies buying Russian oil. The real question is whether the administration will use them.
China’s new restrictions on rare earth sales come with a twist. Instead of simply controlling the export of rare earths from China—the move it made in April—Beijing announced that it will require a license for any cross-border sale worldwide. That means a distributor in France that resells Chinese-origin rare earth magnets to a German auto manufacturer will need a license from the Chinese Ministry of Commerce. China’s new rules also specify that buyers tied to foreign militaries will have their applications denied, and companies producing advanced semiconductors will get extra scrutiny.
Thanks to Chinese dominance in rare earth processing—China controls about 90 percent of the market for turning rare earths into usable metals—its rules will affect a wide range of industries and consumer products. Rare earths are present in numerous defense systems, including fighter jets, warships, missiles, and drones. Permanent magnets are used to make all kinds of electronics, from everyday devices like air conditioners to more specialized equipment like industrial robots. Makers of weapons systems, electric vehicles, batteries, and telecommunications equipment are at particular risk.
Why did China announce these controls now? Commentators have offered two primary explanations. The first is that Beijing is aiming to gain leverage in the midst of trade negotiations. The second is that it was merely responding to recent actions by the Trump administration, including a change to the treatment of subsidiary companies on the U.S. export control list, that it saw as a violation of the trade truce agreed to earlier this year.
U.S. actions may have driven the specific timing of China’s rules, but the scale of the response suggests a calculated escalation driven by a perception of weakness on the U.S. side. After seeing Trump rapidly abandon his global tariffs in April, Xi likely believes the United States cannot endure a prolonged confrontation. Chinese negotiators have reportedly become frustrated that the U.S. side has so far refused to remove all tariffs and technology export controls; they may believe that by threatening supplies of critical minerals once again, they will bring the Trump administration around. Convenient as it may be for Beijing to argue that the United States broke the cease-fire, China’s escalation was probably driven just as much by a desire to gain greater leverage over what it likely sees as a chaotic and reactive U.S. administration.
As dramatic as the U.S. reaction to the new rules has been, the rules’ bark may be worse than their bite. Beijing has a habit of announcing export control actions only to largely let goods flow anyway. In 2022, the Chinese government published a list of technologies it was considering controlling, including LiDAR sensors used in self-driving cars, CRISPR tools for gene editing, and equipment used to make solar panels. Three years later, little on the list has actually been controlled. In 2023, China started requiring licenses to export gallium and germanium, and in 2024, it added antimony to the list. Yet exports of all three have continued. Some importers have periodically struggled to get licenses, but Beijing has seemingly used the requirement more to gather data than to block sales.
Chinese policymakers have already begun to signal that they will be similarly flexible this time around. On Oct. 11, a spokesperson noted that the controls “are not export bans” and emphasized that “licenses will be granted.” Although Western defense companies are likely to be shut off, for other buyers, the effect is likely to be more muted. “Provided the export license applications are compliant and intended for civilian use, they will be approved,” a Commerce Ministry spokesperson said on Oct. 16. Although the rules call out chip producers, some chip companies have built stockpiles to cushion against shutoffs, and the elements controlled by the rules are less central to chipmaking than to other industries.
China will also find enforcing its new rules a tricky business. Earlier this year, its approach involved requiring a license for all exports of specific minerals, not trying to single out individual industries or track sales abroad. Resuming that approach, this time with truly global rules, would cause short-term chaos but would also help unite the world against China’s tactics...
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Some of the China - Japan history 2010 - 2013:
https://climateerinvest.blogspot.com/search?q=China+Japan+rare+earths
