China bans graphite exports. The New Green Economy will be Made In China, or not at all.

Beginning on December 1st, Chinese exporters of high-quality graphite will need to apply for special permission to ship graphite to buyers outside China. This is a serious blow to supply chain managers and manufacturers of electric vehicles and equipment outside China, who hope to build electric vehicles and equipment. China controls 96% of the high-quality graphite production that eventually finds its way into lithium-ion batteries. The synthetic graphite is crucial, because graphite's chemical properties are so valuable in electric vehicle production: graphite is an excellent conductor of electricity, it is stable, and it is somewhat abundant. Graphite's stability allows for lithium to be packed at high densities, without degradation. Lithium and graphite together allows for a battery's fast charging, and high stored capacity. Shandong and Henan are two provinces in China, where the bulk of the industry is dedicated to the heavy manufacturing: aircraft, buses, trains, passenger cars, and equipment for mining, agriculture, road building, and forestry. Hundreds of factories in this area produce battery-powered models of this machinery, and at price points that are highly attractive to Western buyers. However, tariffs against China-built products are 25% or more, and foreign companies are hoping to compete in the EV space. Such competition is only possible, however, if China agrees to continue shipments of the graphite used to make the batteries, or the batteries themselves. Beginning on 1 December (2023), the policy of the China trade ministry will be greatly restrictive, and greatly advantageous to the Chinese factories that build electric-powered vehicles and equipment. This new policy will put foreign politicians, supply chain managers, and industrial planners in an awkward position, and has presented them with two bad choices. One option is that they recognize that factories in Europe and North America will be unable to produce the equipment and vehicles required to meet the onerous environmental mandates and targets, and reject them. The second choice is to prepare hundreds of billions of dollars worth of orders for Chinese factories who can help them achieve their ambitious climate goals.