China ready to strike back using rare earths: State media

China accounted for 80 per cent of rare earth imports between 2014 and 2017 by the US.
China accounted for 80 per cent of rare earth imports between 2014 and 2017 by the US.PHOTO: REUTERS

Strong commentaries warn US of export restrictions as retaliation in trade war

BEIJING • China is ready to use rare earths to strike back in a trade war with the United States, Chinese newspapers warned yesterday in strongly worded commentaries on a move that would escalate tensions between the world's two largest economies.

President Xi Jinping's visit to a rare earth plant last week had sparked speculation that China would use its dominant position as an exporter of rare earths to the US 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. While China has so far not explicitly said it would restrict rare earth sales to the US, Chinese media has strongly implied that this would happen.

In a commentary headlined "United States, don't underestimate China's ability to strike back", the official People's Daily noted the US' "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!" added the ruling Communist Party newspaper.

"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!"

The expression "Don't say we didn't warn you" is generally used by official Chinese media only to warn rivals over major areas of disagreement, for example, during a border dispute with India in 2017 and in 1978 before China invaded Vietnam.

In its own editorial, sister paper the Global Times said an export ban on rare earths "is a powerful weapon if used in the China-US trade war".

"Nevertheless, China will mainly use it for defence," it added, noting that while China might incur losses from a ban on exports, the US would suffer more.

 
 
 
 

The newspaper's editor said on Twitter late on Tuesday that Beijing was "seriously considering" restricting exports of rare earths to the US.

China has used sales of rare earths to exert pressure in past diplomatic disputes.

Chinese trade experts say that if Beijing moves forward with new restrictions on rare earth exports to the US, it will likely follow Washington's example and use national security as a justification.

China has repeatedly criticised Washington for what it says are abuses of national security exceptions at the World Trade Organisation, including this week when, according to media reports, it accused the US of breaking rules by blacklisting Huawei Technologies, the world's largest telecommunications network gear maker.

But China for years has used national security considerations to block major US technology companies, including Google and Facebook, from operating in its market.

Shares in the company that was visited by Mr Xi last week, JL Mag Rare-Earth, surged 10 per cent to a record high yesterday, having gained 134.1 per cent this month alone.

China Rare Earth Holdings soared more than 40 per cent, while Australia's Lynas Corp, the only major rare earth producer outside of China, climbed as much as 14.6 per cent.

 
A version of this article appeared in the print edition of The Straits Times on May 30, 2019, with the headline 'China ready to strike back using rare earths: State media'. Print Edition | Subscribe