China gears up to hit US with ‘rare earths’

China warned the United States on Wednesday that the country is ready to use rare earths to strike back in their bitter trade war, saying in an extremely strongly worded commentary ‘don’t say we didn’t warn you’ in a Communist Party newspaper.

President Xi Jinping’s visit to a rare earths plant last week fuelled speculation that China will use its dominant position as an exporter of rare earths to the United States as leverage in the trade war.
Rare earths are a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment. The prospect that their value could soar as a result of the trade war caused sharp increases in the share prices of producers, including the company visited by Xi.

While China has so far not explicitly said it will restrict rare earths sales to the United States, Chinese media has strongly implied this will happen, including remarks from the editor of Global Times on Twitter late on Tuesday.
In a commentary headlined ‘United States, don’t underestimate China’s ability to strike back’, the ruling Communist Party’s official People’s Daily noted the United States’ ‘uncomfortable’ dependence on rare earths from China. “Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery,” it said. “Undoubtedly, the US side wants to use the products made by China’s exported rare earths to counter and suppress China’s development. The Chinese people will never accept this!” the paper added.

The industrial chain between China and the United States is highly integrated and highly complementary, and there are no winners in a trade war, it said. “We advise the US side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”
China has repeatedly criticised Washington for what it says are abuses of national security exceptions at the WTO, including this week when, according to media reports, it accused the United States of breaking rules by blacklisting Huawei Technologies Co Ltd, the world’s largest telecom network gear maker.

The Global Times acknowledged that using rare earths as leverage could be risky. “If China decides to ban rare earths export to the US, it would produce complex effects, including incurring certain losses on China itself,” it said. “However, China also clearly knows that the US would suffer greater losses in that situation.”–DT

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