Today in Chinese trade mischief: Chicken feet edition

China, fresh off of building an international fracas out of a fishing captain with an errant wheel, has found a new arena for conflict with its closest trading partners: chicken feet. The New York Times‘ Keith Bradsher reports that Beijing yesterday levied a 105 percent tariff on U.S.-produced chicken feet — sold almost solely to the Chinese — while retaining its ban on the export of rare earth metals to Japan. But such brinksmanship rarely bodes entirely well in the end for the party unwilling to made amends once the hand of friendship is extended. China may yet become the world’s biggest economy, but it may lose its highly strategic near-monopoly on rare-earths.

As of today, Beijing remains unbowed. Last week, Japanese Prime Minister Naoto Kan sustained a considerable political humiliation by flinching in his game of chicken with Beijing, and releasing Zhan Qixiong, the bad-driving Chinese trawler captain who was arrested after veering into two Japanese patrol boats on Sept. 7. Beijing continues to demand that Japan “apologize” and pay yet-to-be-determined “compensation.” Now an emboldened Beijing is moving on to chicken feet, a tit-for-tat tariff in reaction to U.S. tariffs on Chinese tires: The United States said Beijing is dumping tires, now Beijing says the United States is dumping feet. But Beijing’s dim sum tariff could backfire given the shortage of domestic supply of the delicacy.

There is arguable humor in all this, but not to the Pentagon, among others. The Financial Times‘ Daniel Dombey reports on a U.S. effort to resume rare-earth metals production halted eight years ago. The 17 rare earths in fact are found in many places, but can create an environmental nightmare when mined. The Pentagon needs several of the metals for missile systems and other strategic electronic systems; they are also used in alternative energy technology such as wind turbines and advanced batteries.

It is the latter issue that finally changed Japan’s mind. Without rare earths, Japan’s hybrid Prius could not be built; its leading electronics industry could be crippled. Putting aside China’s protestations that it never did nor would do such a dastardly thing as impose an embargo, many people believe that Beijing did exactly that — and strategic thinkers in the Pentagon, the Energy Department, and elsewhere will therefore accelerate plans for bypassing the Chinese supply. As Julie Gordon reports for Reuters, we may see, for instance, a fast-tracking of long-gestating plans to reopen a Mojave Desert rare earths mine by Molycorp, along with other projects.

As for other challenges posed by China, such as its practice of demanding the intellectual property of foreign companies in exchange for access to the market, I’m less confident about Western backbone. Last week, the FT‘s Jamil Anderlini and Mure Dickie had an excellent feature on how Western makers of high-speed trains gave their know-how to China as part of various rail deals, only to have the Chinese, using virtually the same IP, now undercut these same companies for business around the world.

We have discussed similar complaints by prominent Western CEOs. But Western businessmen have little history of discipline, even when it comes to the almost-certain prospect of a robbery down the road. Big oil companies continue to seek deals in Russia, despite the shellacking of most of Big Oil there; Nissan says it’s prepared to hand over its electric-car technology to Beijing. One wonders whether the rare-earth moment will temper such enthusiasm.