The Star of the East

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China’s New Sanctions Hit Lockheed Martin Where it Hurts

U.S. Air Force F-35A Lightning II Joint Strike Fighters from the 58th Fighter Squadron, 33rd Fighter Wing, Eglin AFB, Fla. perform an aerial refueling mission with a KC-135 Stratotanker from the 336th Air Refueling Squadron from March ARB, Calif., May 14, 2013 off the coast of Northwest Florida. The 33rd Fighter Wing is a joint graduate flying and maintenance training wing that trains Air Force, Marine, Navy and international partner operators and maintainers of the F-35 Lightning II. (U.S. Air Force photo by Master Sgt. Donald R. Allen/Released)

A year ago an article in Bloomberg warned that: “China’s grip on the market for rare-earth metals gives it the ability to target American weaponry in its trade war with the US”. According to the Straits Times, China possesses 95% of Global Output in this field and 80% of America’s supplies. As the article followed up: “Everything from Lockheed Martin’s F-35 Joint Strike Fighter to guided missiles and lasers used to determine targets rely on the elements to perform key functions”.

On Tuesday however, China announced that it was formally sanctioning the munitions firm Lockheed Martin in retaliation sales of American weaponry to Taiwan. The firm, a key component of the U.S-Military Complex, also openly funds think tanks who encourage hostility towards China such as the Australian Strategy Policy Institute (ASPI). Now however, such a move may mean that the firm cannot purchase rare earth supplies from Chinese suppliers anymore, with Simon Moores, managing director of Benchmark Mineral Intelligence, having told the Straits Times previously: “Rare earths are a niche speciality and critical to the Defence Department.”

The decision follows a growing deterioration in U.S-China ties which seen America unleash unprecedented levels of hostility towards Beijing and tightening coercion against Chinese companies. With the United States putting ever growing restrictions on Huawei, which recently included a ban on Federal Government contracts with U.S companies who do business with it, as well as linking a host of other Chinese companies to the military, it may be apparent that China’s calculus is changing and it felt time is now to reciprocate against companies also of strategic value to the American government.

It is not clear what the specific impact of the sanctions will be, but it ought to be made clear this is not business as usual and in the midst of America promoting militarization around China’s periphery, including in the Taiwan Strait, the South China Sea and broader specific, Beijing is out to hit Lockheed Martin, a pinnacle of the military Industrial Complex, where it hurts. As the hawks like to frequently say in Washington, you cannot keep funding someone who is in effect your enemy, and China has finally realized that. Welcome to the new cold war.