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| Global critical minerals markets |
A recent US House of Representatives report has renewed accusations against China for manipulating global critical minerals markets to expand its economic power and geopolitical influence. The report highlights China's control over key materials and calls for tighter regulatory measures to counteract its market dominance.
Allegations of Price Manipulation
The bipartisan report, released by the US House Select Committee on China, alleges that China has used its position as the world's largest processor of critical minerals, including rare earths, to distort global pricing. According to the report, this manipulation has made it difficult for the US and its allies to accurately assess the true value of these materials, which are essential to various industries including defense, electronics, and clean energy.
The committee claims that China’s actions have had far-reaching effects, particularly on industries reliant on these minerals. For instance, lithium and rare earth prices have reportedly been subject to deliberate fluctuations, with China acting to either stabilize or drive prices down to benefit its own economy. These practices, the report argues, have led to significant losses in US jobs and put national security at risk.
Impact on Global Markets and Policy Recommendations
The report also suggests that China's influence extends to major global trading platforms such as the London Metal Exchange (LME), which is owned by the Hong Kong Exchanges and Clearing (HKEC). This raises concerns about whether the LME's published prices truly reflect global supply and demand, or if they are skewed by Beijing’s strategic interests.
In response, the committee has put forward 13 policy recommendations aimed at addressing the growing threat posed by China's dominance in critical minerals markets. These include stronger oversight of price reporting agencies, the creation of a US minerals stockpile, and the establishment of a "critical minerals czar"—a position already implemented under the Trump administration. The recommendations also emphasize the need for coordinated international action to reduce dependency on Chinese-controlled mineral supplies.
Legislative and Strategic Implications
The release of the report signals a continued bipartisan effort to curb China’s influence in the critical minerals sector. Both the Trump and Biden administrations have sought ways to reduce China’s market share in these strategic materials, recognizing the potential economic and security risks. However, the report underscores that a multifaceted approach, rather than a single policy, is necessary to ensure US competitiveness and safeguard national interests in the long term.
In conclusion, the report serves as a call to action for US policymakers to tackle the complex challenges posed by China’s manipulation of critical minerals markets. It is a critical juncture for the US to reinforce its domestic industries, increase transparency, and ensure fair global pricing in these vital sectors.
ScrapInsight Commentary
The US House report further highlights the growing geopolitical tensions surrounding critical minerals. With increased scrutiny on China’s market manipulation, there is likely to be a ripple effect on global pricing and trade dynamics, potentially driving policy shifts in both the US and other major economies.
