China ready to hit back at US with rare earths: newspapers

Ann Santiago
May 30, 2019

While not actually rare, China accounts for more than 90 percent of global production, according to the U.S.

China is considering limiting the exports of rare-earth materials to the U.S. On Tuesday, the country's state-run media said Beijing could retaliate against the asserting dominance in the global rare-earth market.

"However, if anyone wants to use imported rare earths against China, the Chinese people will not agree".

The Trump administration has also angered Beijing by imposing harsh new sanctions on Chinese high-tech pioneer Huawei, which is bidding to be the lead firm in installing and operating the next-generation 5G telecommunications networks.

Roughly 80% of "rare earths' imported by the US between 2014 and 2017 came from China".

China state media reports suggest the country is considering limiting exports of "rare earths" as the trade war with the USA escalates.

The NDRC official told Global Times China has long favored open trade and reliable supplies of rare earth products to the global market.

Molten rare earth metal Lanthanum is poured into a mold at Jinyuan Company's smelting workshop near the town of Damao in China's Inner Mongolia Autonomous Region, October 31, 2010.

Lawmakers on both sides of the aisle have sought to lessen USA dependence on China for rare earth minerals, especially since they're used in military equipment and energy infrastructure.

The nation's producers have rallied hard in recent weeks on the view that rare earths could be an ace in the trade war. It was also used before conflict broke out between China and Vietnam in 1979. Washington raised tariffs to 25% from 10% on $200 billion (R2.9 trillion) worth of Chinese goods on May 10, and Beijing said three days later that it would raise tariffs on $60 billion (R885 billion) worth of American goods starting June 1.

The U.S. Defense Department has briefed Congress on a report on rare earth minerals as it looks to reduce American reliance on China, a Pentagon spokesman told Reuters on Wednesday, amid mounting concern in Washington about Beijing's role as a supplier.

A 2018 USA government report entitled "Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States" has highlighted the Defense Department's reliance on China's supply of the elements.

The paper also called on the Chinese government to intensify a "crackdown on the smuggling of rare earths to the United States".

China is busy upgrading its rare-earth sector. However, concentrated and economic deposits are scarce, and production is dominated by a handful of countries. Rare earth metals are chemically similar and include cerium, neodymium, europium, and samarium.

However, it added, "China also clearly knows that the United States would suffer greater losses in that situation". The move backfired after the country banned the export of rare earths to Japan in 2010. China is the biggest by far, accounting for nearly 70 per cent of global production and 40% of the world's reserves, USGS data show. Hong Kong-listed China Rare Earth Holdings Ltd. spiked as much as 41 per cent and has doubled in value in May.

When the U.S. raised additional tariffs on US$200 billion in Chinese goods, sparking retaliatory Chinese tariffs on US$60 billion in USA products, the minerals were one of the only items left off the United States tariffs list. The WTO ruled in favor of America, while prices eventually slumped as manufacturers turned to alternatives.

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 telecom giant Huawei earlier this month, while trade talks have apparently stalled.

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