Before WWII the Polish kept horses serving in artillery,
while other countries mainly switched to tanks. From that behavior comes a
joke: “Polish army is motorized, everybody is using bikes”.
"We are facing an economic war, the shrapnel of which
will continue to fall upon us. China opposes Western armaments, and
restrictions on the export of rare earth metals are a deliberate policy,"
says Jakub Jakóbowski, deputy director of the Center for Eastern Studies.
China is expanding export restrictions on rare earth metals.
Which metals are involved, and what will these restrictions consist of?
This is an extension of the restrictions from the spring,
which were the strongest in history. In the spring, the restrictions concerned
heavy rare earth metals, which are used, among other things, in the production
of permanent magnets widely used in the arms and automotive industries. At that
time, a licensing requirement was introduced, which affected many European and
American companies. Before obtaining a license, Western companies must
"confess," meaning they must specify precisely what these rare earth
metals will be used for.
Companies operating in the defense
sector could not count on obtaining such a license.
This was one of the most important issues before the
EU-China summit. The US negotiated separately. China pressured the United
States to concede in other areas in exchange for easing its restrictions on
rare earths. In the spring, the entire world was scrambling for these licenses.
Trade data shows that in May, Chinese exports of heavy rare earths fell to a
few percent of previous sales, but later rebounded.
What's happening now?
The Chinese are expanding the spring restrictions to include
an extraterritorial element. Previously, the issue was who could buy, and
defense companies were barred from doing so. Now, the issue is where various
components and products made from regulated Chinese raw materials will
ultimately end up. If a European company wants to use Chinese rare earths to
produce a component, it will now have to ask which markets and to whom it can
sell the product. The same applies to foreign products of this type made using
Chinese machinery, for example, for refining rare earths. This will give the
Chinese enormous control.
The main target of this action is now dual-use goods. And
the Chinese are saying bluntly: if the product is intended for the arms sector,
they won't sell these metals.
So, are the Chinese deliberately
blocking Western arms production?
In my opinion, yes. They view
American, but also European, arms as a threat. In their opinion, although NATO
arms are currently aimed against Russia, they could later be directed against
China. Their strategic goal is to slow down primarily American, but also
European, arms buildup.
To what extent will they succeed?
It depends on whether American, German, French, and Polish
arms companies have diversified their supply chains in recent years, whether
they have stockpiles, and can now say that these restrictions don't bother
them. The question is whether we've done enough recently. I don't know the
answer.
Will this be a consistent approach, or, like the recent US
action on tariffs, can we expect a turbulent turn of events?
When the scythe hits a stone, it stops – the question is how
much pressure the West can exert on China. During the tariff war, President
Donald Trump lost to China and had to withdraw some of his restrictions. The
balance of the spring trade skirmish is that the Chinese held firm and
withstood US pressure, and now they're launching a counterattack. This is
likely a bid to raise the stakes ahead of the upcoming talks between Trump and
Xi Jinping, which are scheduled to take place soon in Seoul.
The problem may be that the West will likely not act
together again, with the US negotiating separately.
We've been discussing rare earth elements and the risks
associated with their extraction in the EU for at least 10 years. The Critical
Raw Materials Act, among other things, has been developed; we have a diagnosis
of the situation and the appropriate instruments. These elements don't require
large quantities of production, and it's not a terribly valuable market. The
launch of domestic mining operations in EU countries has so far been blocked by
bureaucratic issues such as obtaining environmental permits and a lack of
determination to commit the money and act quickly. This must be supported by
governments, because such mining will never be commercially viable in our country
– buying from China will always be cheaper, but it creates a dangerous
dependency.
We should start taking this problem very seriously. We are
facing an economic war, the shrapnel of which will be our downfall. This is not
a drill. This has begun to happen, and as Poland and the EU, we should start
thinking about pursuing an industrial policy that will ensure our sovereignty,
at least in the defense sector, which requires rare metals. China opposes
Western military buildup, and the introduction of these restrictions is not a
coincidence, but a deliberate policy to slow it down. It's high time to start a
discussion about how the Chinese are reacting to this. We are to function in a
world where our enormous dependence on China is beginning to be used against us
in the critical area of arms.
About the Interviewee
Jakub Jakóbowski
Deputy Director and Head of the Chinese Center for Eastern
Studies"
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