Sail across the sea

Chapter 474 Standing Up for the Japanese

“However, Japanese companies have indeed reduced their imports of rare earth elements. Now, the foreign trade departments of several provinces—yes, mainly the foreign trade department of your Maolin Province—are asking us for countermeasures, saying that their foreign exchange earnings from rare earth elements this year will be significantly affected,” Luo Shenrong said.

"This is just a smokescreen put out by Japanese companies," Gao Fan said. "They all have some inventory on hand, and they're just making a show of reducing imports to throw us into disarray. Besides, rare earth elements are something that's used up as they become scarce. They don't want to import them, and we don't want to export them either. Who's afraid of whom?"

"Gao... uh, Comrade Gao, which of the things you just said is true?" Luo Shenrong asked cautiously.

Which sentence did you say?

"Do you really think Japanese companies are just creating a smokescreen, or do you think we shouldn't export rare earth elements at all?"

"Both statements are true. Their reduction in imports is feigned, while our reluctance to export is real. In a way, we're all heading in the same direction."

“We wouldn’t dare say we don’t want to export,” Luo Shenrong said tactfully. “As you know, our country is in dire need of foreign exchange. Every penny of export earnings is something we in the foreign trade sector have to strive for.”

"Although rare earths are very valuable, their importance is slightly different compared to our need to import advanced equipment and purchase steel and urea. Our country is a major rare earth resource country, and it is still very necessary to export a small amount of rare earths to import materials that our country is in short supply."

Sigh, youth really does mean a lack of experience. I wonder if it's because I attended a resource conservation class in school that I think exporting rare earth elements is not an option.

If we don't export rare earths, how will we generate foreign exchange?
Without foreign exchange, how can we import advanced equipment?

Without importing advanced equipment, how will we build the Four Modernizations...?

You're still too young!

Luo Shenrong muttered to himself, but then saw Gao Fan shake his head and say with a smile, "Director Luo has misunderstood. We only said to reduce the export of rare earth ore, not that we can't use rare earth to earn foreign exchange."

"A ton of mixed rare earth oxides, including resource tax, is only worth $3, but when refined into high-purity rare earths, it can be sold for $9, which is three times the amount of foreign exchange earned."

"If we could completely stop exporting raw rare earth ore and switch entirely to exporting refined rare earth, our foreign exchange earnings could be twice as much as they are now. Why wouldn't we do that?"

"That might not be so easy," Luo Shenrong said.

In his mind, he felt that Gao Fan was being presumptuous again. Everyone knows that refined products are more valuable than crudely processed products, but that's money that only developed countries are entitled to earn. When did it become the turn of developing countries to earn it?
For example, China's oil is exported to Japan, where it is refined into plastics and synthetic fibers, which are then sold back to China at ten times the price.

China does have its own oil refineries and chemical plants, but their production capacity and product quality cannot compare with those of foreign countries, so in the end, they can only sell crude oil.

The refining of rare earth elements is said to be more complex than oil refining. Can the Chinese handle it?
He wasn't unaware of the existence of the Zeshan Refinery, but he couldn't equate it with Japanese companies like Yttrium Corporation and Sande Alloy. He felt that perhaps Zeshan Refinery was simply the upstream process in their operations? "Besides foreign exchange considerations, the export of rare earths also relates to our country's image in the international market. The Japanese Ministry of International Trade and Industry has already raised questions about our imposition of a special resource tax, requesting an explanation of the basis for this tax."

"By the way, last week we invited a professor from Renmin University to a meeting. One of his doctoral students, Qi Honghuang, also expressed his views on the resource tax at the meeting, believing that our country's practice is a serious violation of international trade rules and should be corrected immediately."

"Which international trade rule did he say we violated?"

"GATT, which is the rule of the General Agreement on Tariffs and Trade."

"Haven't we joined the GATT yet?"

"Comrade Xiao Gao, your statement is not accurate. Our country is one of the founding members of the GATT, but it was excluded from the GATT due to some historical reasons. Now our country is applying to restore its status as a contracting party, so we should still try our best to abide by the rules of the GATT."

"So early..."

Gao Fan muttered something very softly, probably too softly for Luo Shenrong to understand.

In Gao Fan's memory, China only began its vigorous negotiations to rejoin the GATT in the 90s. Because Western countries generally criticized China's economic situation, China even took a lot of drastic measures. As a result, before the GATT was officially terminated, China was unable to regain its contracting party status and had to renegotiate its WTO accession.

What Gao Fan was unaware of was that relevant national departments had already been studying the issue of GATT accession as early as 1980, and the formal application was submitted in July 1986. Currently, it is a sensitive period before the application is submitted, so any issues involving the GATT will receive high attention.

As a country excluded from the GATT, China holds a strong sense of awe for the concept of "international trade rules," regarding them as sacred and inviolable. Whenever accused of violating international trade rules, we become extremely cautious, deeply reflecting on our actions and constantly questioning the magnitude of our mistakes.

After paying countless high tuition fees, the Chinese people gradually realized that the so-called international trade rules are nothing more than a tablecloth that anyone can take and use to wipe the table or to wipe their shoes.

When even imperialist powers ran out of resources, international trade rules became nothing more than a worthless, useless piece of paper, the kind that would leave anyone with athlete's foot if thrown in their face.

"I'd like to know what the Ministry of Foreign Trade thinks about this matter?" Gao Fan decided to listen to their opinion first. "Is there any international practice for levying resource taxes on scarce resources, or does it really violate international trade rules?"

Luo Shenrong looked somewhat embarrassed and stammered, "There is still no clear conclusion on this matter. However, levying resource taxes is quite common internationally."

"The main objection raised by Japan's Ministry of International Trade and Industry is that they believe our resource tax rate is too high, and they want to discuss this with us."

Gao Fan immediately understood. It turned out that the Japanese couldn't find any fault with us, they were just raising questions, while the traitors in the country were anxiously defending the Japanese.

(End of this chapter)