Rare Earth Diplomacy: Japan Holds Chinese Boat Captain;China Blocks Rare Earth Exports to Japan;China Holds 4 Japanese on Spy Charges;Captain Set Free

Tensions between China and Japan reached new heights in an escalating war of nerves between Japan and China. Here is the approximate sequence of events.

Japan kicked things off on September 7, with the arrest of a Chinese boat captain in disputed waters. In an escalating dispute, China blocked exports of rare earth metals to Japan on September 22.

Rare earth minerals are used in manufacturing and weapons production. The US gets most of its rare earth elements from China.

Tensions increased on September 23 when China arrested four Japanese employees of Fujita Corp on suspicion of violating Chinese law regarding the protection of military facilities.

Secretary of State Hillary Clinton entered the fray "urging dialogue".

The House Armed Services Committee scheduled a hearing on Oct. 5 to review the American military dependence on Chinese rare earth elements.

Japan releases captain.

September 10, 2010: China demands Japan release detained boat captain

China's foreign minister demanded that Tokyo immediately release the captain of a Chinese fishing boat that collided with two Japanese patrol vessels near disputed islands. But a Japanese court ruled he can be held 10 more days, deepening the diplomatic spat.

The collisions occurred Tuesday after the Chinese fishing boat ignored warnings from the patrol vessels to leave the area and then refused to stop for an inspection, Japan's coast guard said.

The incident happened off Japan's Kuba island, just north of disputed islands known as Senkaku in Japanese and Diaoyu in Chinese. The islands, about 120 miles (190 kilometers) east of Taiwan, are controlled by Japan but are also claimed by China and Taiwan.

September 14, 2010: Japan frees 14 crew, holds Chinese ship's captain

Japan freed 14 crew members of a Chinese fishing ship nearly a week after their vessel and two Japanese patrol boats collided near disputed southern islets. But China lashed out at Tokyo's decision to keep the captain in custody.

But Japan continues to detain the captain of the Chinese trawler, Zhan Qixiong. A Japanese court has granted prosecutors permission to keep the captain in custody until September 19 to decide whether to formally indict him.

The dispute has sparked anti-Japanese activists in China and Taiwan, which also claims the islands in question, to sail to the area on their own protest missions - although both governments have sought to rein them in so as not to inflame tensions further.

September 19, 2010: China halts ministerial-level contacts with Japan

China on Sunday broke off high-level government contacts with Japan over the extended detention of a fishing boat captain arrested near disputed islands. It came a day after anti-Japanese protests broke out across China on the anniversary of the start of a brutal Japanese invasion of China in 1931 that has historically cast a shadow over ties between what are now the world's second and third-largest economies.

This is the lowest bilateral relations have fallen to since they were strained under former Prime Minister Junichiro Koizumi, whose repeated visits to a war shrine in Japan during his 2001-2006 term angered China.

The two countries halted ministerial-level defense talks for three years from 2003. But even in those tense times, Japan's foreign minister visited China in 2004 and met Wen.

September 22, 2010: Amid Tension, China Blocks Vital Exports to Japan

Sharply raising the stakes in a dispute over Japan�s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.

China mines 93 percent of the world�s rare earth minerals, and more than 99 percent of the world�s supply of some of the most prized rare earths, which sell for several hundred dollars a pound.

Japan has been the main buyer of Chinese rare earths for many years, using them for a wide range of industrial purposes, like making glass for solar panels. They are also used in small steering control motors in conventional gasoline-powered cars as well as in motors that help propel hybrid cars like the Toyota Prius.

American companies now rely mostly on Japan for magnets and other components using rare earth elements, as the United States� manufacturing capacity in the industry became uncompetitive and mostly closed over the last two decades.

The Chinese halt to exports is likely to have immediate repercussions in Washington. The House Committee on Science and Technology is scheduled on Thursday morning to review a detailed bill to subsidize the revival of the American rare earths industry. The main American rare earths mine, in Mountain Pass, Calif., closed in 2002, but efforts are under way to reopen it.

The House Armed Services Committee has scheduled a hearing on Oct. 5 to review the American military dependence on Chinese rare earth elements.

The Defense Department has a separate review under way on whether the United States should develop its own sources of supply for rare earths, which are also used in equipment including rangefinders on the Army�s tanks, sonar systems aboard Navy vessels and the control vanes on the Air Force�s smart bombs.

September 23, 2010: Japan confirms 4 nationals detained in China

A Japanese foreign ministry spokesman confirmed Friday that four Japanese nationals had been detained in China on suspicion of violating Chinese law regarding the protection of military facilities, as tensions rise between Asia's two biggest economies.

"We were told the reason for the detention of the four Japanese people is violation of Chinese law relating to protection of military facilities," said Hidenobu Sobashima, deputy foreign ministry spokesman.

September 24, 2010: Clinton Urges China-Japan �Dialogue,� Stays Neutral in Dispute

Secretary of State Hillary Clinton urged Japan to resolve issues with China over a detained Chinese fishing captain through dialogue, as U.S. officials declined to step into a broader territorial dispute.

The U.S. encourages �both sides to work aggressively to resolve� their differences �as quickly as possible,� State Department spokesman Philip J. Crowley told reporters in New York yesterday, where Clinton met with Japanese Foreign Minister Seiji Maehara on the sidelines of the United Nations General Assembly�s annual meeting.

The diplomatic dispute has caught the attention of the U.S. military, which relies on Japan to provide bases and other support for American forces. Japan is one of two security treaty allies for the U.S. in the region, along with South Korea.

Watching Tension �Carefully�

�We�re watching that tension very, very carefully,� said Navy Admiral Mike Mullen, chairman of the Joint Chiefs of Staff and President Barack Obama�s top military adviser. �Obviously we�re very, very strongly in support of our ally in that region, Japan,� he told reporters at the Pentagon yesterday.

September 24, 2010: Japan Releases Chinese Boat Captain

Japanese prosecutors announced that they have decided to release a Chinese sea captain who has been in Japanese custody since a ship collision in the East China Sea, amid escalating tension between the two nations.

"We decided it was inappropriate to continue the investigation while keeping the suspect in custody any further, considering the future of the Japan-China relationship," an official from the Osaka prosecutors' office said at a hastily called press conference Friday afternoon.

I'm sure glad we once again have a stable source of rare earth elements, aren't you?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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