The Great Debate UK

from Breakingviews:

China may stub its toe on rare earths quotas

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

HONG KONG -- China may stub its toe on its rare earths quotas. By restricting exports of the metallic elements, it is hoping to give domestic industries a boost. But Chinese companies will lose if the move leads to trade restrictions or boycotts of overseas acquisitions. If Beijing is serious about addressing environmental concerns, it should cut rare earths production, not exports.

Rare earths, a group of 17 related elements, are used in electronic devices and clean energy technology. Though China controls just 36 percent of the world's rare earths reserves, it supplies 97 percent of global demand, according to the U.S. Geological Survey. Cutting export quotas will make sure that, in the short term, more production using rare earths will stay in China. Reopening mines takes time, and there is limited operational expertise outside China.

Though the move raises trade concerns, the World Trade Organisation can't twist China's arm. WTO Director-General Pascal Lamy has said that export restrictions on resources are very difficult to address under existing provisions. Securing access to resources wasn't a political priority when trade rules were set up 60 years ago.

Election may be fought on peak between dips

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campbellBy Ian Campbell

LONDON, April 13 (Reuters Breakingviews) – Gordon Brown says his Labour party will “secure the recovery” if it wins the UK election in May. The opposition Conservatives would kill the upturn, he says. Brown is right in one sense: the “recovery” can easily be broken. But only because it is so fragile in the first place.

The UK’s data looks more encouraging than it actually is. The UK needs exports and production to surge ahead. Trade figures released on April 13 might appear to herald that: February’s trade deficit was its smallest since June 2006.

from The Great Debate:

For Chinese exporters, grass is greener abroad

WeiGucrop.jpg- Wei Gu is a Reuters columnist. The opinions expressed are her own. -

The U.S.-China tire dispute threatens to spill into other sectors and squeeze Chinese exporters' already razor-thin margins further. It might seem mind-boggling to many that Chinese manufacturers are still hanging on to weak overseas markets even though the domestic economy looks much healthier and surely offers more potential.

But there are structural reasons why the grass is greener outside China. The risk of not getting paid, or getting paid late, is significantly lower when dealing with foreign buyers. The cost of international shipping has dropped so much that it can be cheaper to send goods over the Pacific Ocean than across the country.

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