Often in military conflict a tactical move would easily transform to a strategic one when the impact is tectonic. Business strategy is no stranger to this eventuality. President Trump failed to grasp this strategy manoeuvre when he imposed huge tariff on China. China responded with rare earth ban.
Most of the rare earth usually referred as RE are critical minerals. Out of these there are seven key critical ones, samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Most countries that are pitched on technology production such as United States are particularly vulnerable due to the supply chain disruptions that can be caused by the exporter.
According to International Energy Agency (IEA)
China accounts for about 40% of global reserves, 68% of production and 88% of
global supply of Rare Earth minerals. By 2030 two major countries that are in
the game would fare according to the stats below:
Mining: China 54% and Australia 18% globally
Refining: China 77%
and Australia 12% globally
More than mining it is refining that matters a lot.
Once that stage is passed readying RE for export is the most critical function.
As regard to RE China has all spectrum neatly fit into her exporting RE in the
required form? Put it the other way, China dominates the entire supply chain from the mines to the ports.
If China chooses, there can be a supply chain
disruptions at any time. All importing nations of RE have to be at the beck and
call of the dragon. It is evidenced that response by importing nations is low bereft
of a scintilla of negotiating clout.
The counter measure of RE Restrictions imposed by China
to the Trump Tariff is hugely consequential as seen here-under:
a) It cripples US technology suave in terms arms manufacturing and chips production that has dual role in commerce & military
b) At present US stockpile of RE is at dangerously low level and expected to hit bottom before the on this year 2025
c) Entire gamut of productions for civilian use
such as technology equipment, electric
vehicles and other consumer electronics items have to halted till the
supply of RE is replenished to the earlier levels.
In a classic tactical move ending as a startling manoeuvre
in business strategy China was able to call the bluff of America and at the
same time landed a critical blow to each and every country that dares to touch Chinese
exports in the future?
Was it Sun Tzu or Carl Von Clausewitz?
As a business strategist navigating amid geoeconomics, I submit that it is indeed Clausewitz whose expertise in creating fog of war, friction and chaos amongst allies & enemies has taught the Chinese how to respond to Trump Mania!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
