China is known for forging close partnerships with top international firms as a way to forge economic dependence on the country.
One such company is Siemens, a German engineering conglomerate. Siemens’ leaders are now coming to Washington, D.C., to explain how it has been working with the Chinese government to assure the steady supply of a key technology.
Siemens’ chief executive, Joe Kaeser, will join White House chief economic adviser Larry Kudlow and treasury secretary Steven Mnuchin for Monday’s White House announcement in which the U.S. government will announce its intention to impose a 25% tariff on $50 billion of Chinese goods. The U.S. will also impose a 10% tariff on an additional $200 billion of Chinese products, according to Mnuchin.
Siemens has operations in China, and Kaeser will tell reporters that the firm is working with the Chinese government to ensure that the region is not threatened by barriers that might otherwise be erected to prevent the Chinese company’s competitor, U.S. based General Electric, from gaining a reliable supply of Chinese cobalt.
Cobalt, a key ingredient in electric batteries and electric vehicles, has seen its production rise significantly, from 200 tons of cobalt in 2000 to over 500 tons in 2017.
China’s move to grant a license to General Electric last year led the Chinese state-owned Industrial & Commercial Bank of China to immediately invest in China Union Rare Earth Co. and SinoCobalt, two domestic companies that are the biggest suppliers of cobalt.
China produces almost half of global supplies of cobalt, and potentially accounting for about 60% of global supply by 2030, according to scientists.
General Electric, which ships its cobalt to electronics and oil and gas companies, is worried the tariffs and restrictions proposed by the Trump administration could create a shortage of the critical metal.
In an interview with CNBC, the company’s CEO, John Flannery, called the Trump administration’s proposals “a clarion call for producers.”
In response to Flannery’s comments, President Trump signed a memorandum to instruct the U.S. Commerce Department to consider adding a restriction on imports of foreign-made rare earths.