00:00And China's move to unveil export control on the rare earth supply chain is at the center of renewed tensions with the U.S.
00:06And now they're at risk of a global pushback with other countries seeking to form a response.
00:11Joining us from Washington now is Grayson Baskaran, Critical Mineral Security Program Director at CSIS.
00:16Grayson, it's great to have you.
00:19We're still trying to figure out why China seems to have gone from a position of hesitation when it comes to rare earths to now a little bit more assertive.
00:28Why do you think that is?
00:29And do you think in some way they are overplaying their hand now?
00:34Thanks so much.
00:35It's great to be here.
00:35China has taken an increasingly assertive stance over the better part of this year.
00:40What we really saw starting April 4th was a series of increasingly restrictive measures.
00:45First broad based in terms of requiring export controls to the most recent restrictions last week,
00:51essentially prohibiting the use of any Chinese heavy rare earth or magnets in any foreign military use, which is a very, very strict restriction.
01:01Now, is China overplaying its hand?
01:02China's in a tight spot.
01:04China's economy is kind of facing, you know, some of the highest levels of deflation in modern Chinese history.
01:10You have high youth unemployment.
01:11You have a struggling property sector.
01:13You have soft demand.
01:15And on the back of these challenges, what China is really looking for is a more durable tariff policy.
01:19The trade war is having real economic consequences with the United States.
01:24And so going into these negotiations, China is trying to take as much leverage as they have.
01:29But the risk is that many economies around the world are now mobilizing to counter China's restrictions.
01:37Right.
01:38Gracelyn, the this is David here, by the way.
01:41So I have a two part question for you on that.
01:43So do you should we consider a somewhat watered down version of these?
01:50I don't know.
01:51It's restrictions or our policies around magnet exports.
01:55Eventually, eventually, that's that's the first part of my question.
01:58Number two is, is this more a PR exercise for China than it is an economic question?
02:05It's certainly a negotiating tool.
02:07If you go back and you look at the announcement from the Chinese Ministry of Commerce, it explicitly says, you know, China is open to bilateral and multilateral conversations around these export controls in terms of, you know, how to create resilient supply chains.
02:21So it's certainly leaving the door open for a conversation, not only with the United States, but also with other countries.
02:28Now, these restrictions, again, some of them have quite it.
02:31There's a runway before they go into effect.
02:33Some of these restrictions don't go into effect until December 1st, essentially creating what is about a month and a half or so of room for negotiations.
02:42And we could see various things come onto the table here beyond rare earths and magnets, tariffs and semiconductors.
02:50Except for sexual act, we aren't going into effect.
03:06So we're thinking about this, a lot of strategies that work uns
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