Business Essentials for Professionals


China Could Hit US With Rare Earths In The Ongoing Trade War

China Could Hit US With Rare Earths In The Ongoing Trade War
In the ongoing bitter trade war with the United States, China has warned that it could hit back by using its access to rare earth elements. This was conveyed by the Chinese authorities through an extremely strongly worded commentary in China’s Communist Party newspaper on Wednesday where in China said: “don’t say we didn’t warn you.”
Since last week, speculations have been making the rounds that China could make use of its dominant position in the global supply chain for rare earths as a leverage in the trade war ever since the visit of a rare earths plant by the Chinese President Xi Jinping.
Rare earths are a group of 17 chemical elements that are put to use in a very wide range of products from high-tech consumer electronics to military equipment.
While nothing explicitly has been said by Chinese authorities about any plans of it to curb its export of rare earths to the United States, this case has been strongly pursued by the Chinese media that have been claiming that this is a very strong possibility. Such predictions of curtailment of rare earths to the US have also been made on Twitter by the editor of influential Chinese news paper the Global Times late on Tuesday.
The ruling Communist Party’s official People’s Daily noted the “uncomfortable” dependence on rare earths from China of the United States in a commentary carrying the headline “United States, don’t underestimate China’s ability to strike back”.
“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 U.S. 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.
It said that there are no winners in a trade war and stressed on the highly integrated and highly complementary nature of the industrial chain between China and the United States.
“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”
The official Chinese media generally makes use of the term “don’t say we didn’t warn you” when it wants to warn rivals in cases of major areas of disagreement. This tern was used in writings in the official Chinese media in the case of a border dispute with India in 2017 and back in 1978 before the Vietnam invasion by China.
Between the years 2014 and 2017, out of the total import of rare earths by the United States, China accounted for about 80 per cent of that quantity. Rare earth imports have not been excluded from the recent tariffs imposed by the US on Chinese goods along with some other critical Chinese minerals.
However, an increase from 10 per cent to 25 per cent have been made by China on the tariffs on imports of U.S. rare earth metal ores from June 1 which has made processing of the material in the China les economical.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc