China steps up threat to deprive US of rare earths

BEIJING: Chinese state media yesterday dangled the threat of cutting exports of rare earths to the United States as a counterstrike in the trade war, potentially depriving Washington of a key resource used to make everything from smartphones to military hardware.

The warning is the latest salvo in a dispute that has intensified since President Donald Trump ramped up tariffs against China and moved to blacklist telecoms giant Huawei earlier this month, while trade talks have stalled.

Beijing had already dropped a big hint that rare earths could be in the firing line by showing images last week of President Xi Jinping visiting a rare earths factory in Ganzhou, central China.

An official from the National Development and Reform Commission, China’s state planner, issued a cryptic warning late on Tuesday.

“You asked whether rare earths will become China’s countermeasure against unwarranted suppression from the US. What I can tell you is that if anyone wants to use products made from our rareearth exports to curb and suppress China’s development, I’m sure the people of Ganzhou and across China will not be happy with that,” the official said in answers to questions published by state media.

The official said rare earth resources should “serve domestic needs first”, but China was willing to meet the “legitimate needs of countries around the world”. State media were more blunt. “Waging a trade war against China, the United States risks losing the supply of materials that are vital to sustaining its technological strength,” the official Xinhua news agency said in a commentary.

In an editorial, the state-owned

Global Times tabloid said the “US will rue forcing China’s hand on rare earths”.

“It is believed that if the US increasingly suppresses the development of China, sooner or later, China will use rare earths as a weapon.”

China produces over 95 per cent of the world’s rare earths, and the US relies on China for upwards of 80 per cent of its imports.

With Huawei facing US bans on obtaining key American-made components for its equipment, Beijing could also hurt US companies in what is shaping up as a battle for who will dominate the future of high tech.