By Kim Tae-gyu
China’s recent diplomatic victory over Japan makes Korean bureaucrats and corporations sweat since the former’s lethal weapon of rare metals against the latter is expected to work on Korea as efficiently as on Japan.
Late last week Tokyo released the detained captain of a Chinese fishing trawler, who was detained by the Japanese coast guard early this month while operating in the waters around a group of uninhabited rocky outcroppings in the East China Sea.
Although Japan has shown a very stern attitude on issues involving disputed territory, the country easily surrendered this time around as China reportedly halted shipment of rare earth elements although Beijing denies such maneuver.
“What if China adopts the strategy of stopping shipment of the materials to Korea amid bilateral political or economic disputes? We would be at a loss on how to deal with it,” said a Seoul analyst who asked not to be named.
Rare-earth elements refer to a collection of 17 chemical elements in the periodic table. They are indispensable in producing high-tech products or eco-friendly technologies such as electric cars, wind turbines and liquid crystal displays (LCDs).
Korea, home to the world’s top LCD manufacturers, does not produce them at all and depends wholly on imports to procure them. Last year, all of its 2,600 tons of demand were met by shipments from China.
The state-run Korea Resources Corporation (KRC) has set up a target of maintaining its reserves for the rare-earth metals at more than 1,150 tons by 2016 but its present storage remains at a mere 3 tons.
In this climate, Korea seems to have no choice but to rely on China, around 95 percent of which produces all supplies. The communist state even imposed a global export quota on them.
Industry watchers point out that Asia’s fourth-largest economy needs to generate a long-term plan of grappling with the aforementioned problems.
“Many Koreans tend to presume that they would need us just as much as we need them. However, the reality check shows a different result as amply demonstrated by the past disputes,” the analyst said.
“Have a look at the garlic case a decade ago. We were already not in the position to commission a tit-for-tat strategy against China and now there are the rare-earth elements. We need to do something to level the playing field but the hitch is that nobody seemingly knows how to do so.”
Midway through 2000, the former Kim Dae-jung administration jacked up tariffs on Chinese garlic from 30 percent to as high as 315 percent by 2003 in order to protect Korean farmers from cheap Chinese imports.
A week later, the Chinese government countered the move by banning imports of Korean handsets. Seoul immediately backed off by cutting the tariffs after quick negotiations.
Korea’s dependency on China has shot up since then as the latter became the No. 1 trading partner of the former during the first decade of the new millennium, nudging past the United States.