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Wednesday, November 3, 2021

So will the dragon become such a super power? What did China do that caused panic all over Europe?

China, which scares small countries with new maneuvers, has created panic in Europe this time. Europe's car industry is being badly affected due to China aspires to become a super power and now the jobs related to it are under threat. Indeed, China has monopolized the global supply of magnesium over the past two decades and has managed to beat its European rivals by engaging in massive dumping.

Policy research group POREG reported that China has cut magnesium production, causing much uneasiness in the European Union (EU), as magnesium is critical to sectors such as cars, aircraft and electronics. China's nefarious move can also be understood in the way that China manufactures more than 95 percent of Europe's magnesium requirements.

At the recent EU leaders' summit (October 21-22, 2021) both outgoing German Chancellor Angela Merkel and Czech Prime Minister, Lady Babis, raised the issue of magnesium crisis in Europe. Germany and Italy are both Europe's leading car makers and their concerns about the impact on car production are natural. While Chancellor Merkel pointed to the impact on the cost of producing cars, the Czech PM was even more blunt and said the car sector was facing a 'disaster'.

However, it is being told in media reports that China has cut production due to nationwide energy shortage. At the same time, it is difficult for other producing countries like Russia and Israel to make up this shortfall, as China is by far the world's largest producer. Complete dependence on China is an embarrassment for the EU at the moment, as it often tries to balance relations with China.

The Global Times reported (24 October 2021) that many businesses have resumed production and trade, with constraints and restrictions still limiting production, could result in a 10 percent drop in magnesium exports. According to a joint statement issued by a dozen EU industry groups, magnesium stocks are now in danger of being exhausted by the end of this month (November 2021).

With Chinese factories partially closed due to a nationwide energy crisis and falling magnesium exports, Europe faces a real challenge. It has been warned that if the crisis is not addressed immediately, thousands of businesses and supply chains across Europe will be affected and jobs will be in jeopardy.