You can almost hear the yelps from day traders. In the four days since reports emerged of restricted rare-earth shipments between China and Japan, shares in Hong Kong-listed China Rare Earth Holdings have leapt almost 40 per cent. Inner Mongolia Baotou Steel Rare Earth, the Shanghai-listed behemoth satisfying two-fifths of world demand, is now up 156 per cent year-to-date, against a benchmark down by a fifth.

It has taken a falling-out over a fisherman for markets to appreciate the full implications of China’s control over the market for metallic elements used in smartphones, hybrid cars and precision weapons. China doesn’t have a particularly strong grip on rare-earth reserves; its 36m tonnes are only slightly more than the US (13m) and the former Soviet Republics (19m) put together. But after three decades of investment in upstream mining and downstream processing, steadily driving global competitors out of business, what it does have is 97 per cent of last year’s 124,000-tonne production. China has repeatedly toyed with export tariffs and quota cuts since 2006. Now, with an outright infringement of sales to its biggest customer, resource-poor Japan, it appears to be going one step further.

The temptation to give others the Japanese treatment must be enormous. China knows others can’t catch up quickly: by its own admission, the US could take up to 15 years to build a domestic rare-earth supply chain, and for now, there are no effective substitutes for defence systems. But it is one China should resist, mindful of the threat of reciprocal sanctions in the trading of resources – notably oil – it lacks. Meanwhile, though, amid a regional skirmish, there seems little harm in issuing a global reminder of its utter dominance in some very 21st-century products.