China steps up threat regarding rare earths

Beijing Chinese state media on Wednesday 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 hardwareThe 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 Huawei stepped up its legal battle on Wednesday announcing it had filed a motion in US court for summary judgment in its bid to overturn US legislation that bars federal agencies from using its equipment over security concernsBeijing 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 unnamed official from the National Development and Reform Commission Chinas state planner issued a cryptic warning late TuesdayYou asked whether rare earths will become Chinas 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 Chinas development Im 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 rareearth resources should serve domestic needs first but China is also willing to meet the legitimate needs of countries around the world Shares in rare earth companies surged in the Shanghai and Shenzhen stock markets during Wednesday trading 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 The stateowned Global Times tabloid warned in an editorial posted online that the US will rue forcing Chinas hand on rare earthsIt is believed that if the US increasingly suppresses the development of China sooner or later China will use rare earths as a weapon the nationalist tabloid said China produces more than 95 percent of the worlds rare earths and the United States relies on China for upwards of 80 percent of its imports Rare earths are 17 elements critical to manufacturing everything from smartphones and televisions to cameras and lightbulbs Beijing could hurt US companies in what is shaping up as a battle for who will dominate the future of hightech Huawei took the US to court over a defence bill passed by Congress last year that bans government agencies from using its equipmentBut it also faces a recent Trump administration order that cuts it off from critical Americanmade components for its products The US government has provided no evidence to show that Huawei is a security threat Huaweis chief legal officer Song Liuping told reporters rejecting US warnings that the companys equipment could be used by China to spy on other countries China has been accused of using its rare earth leverage for political reasons before Japanese industry sources said it temporarily cut off exports in 2010 as a territorial row flared between the Asian rivals charges that Beijing denied But experts say the Japan experience showed that China may not have such strong leverageEven with such apparently favorable circumstances market power and political leverage proved fleeting and difficult to exploit according to a 2014 report by the Council on Foreign Relations think tank written by University of Texas professor Eugene GholzThe report said Chinas advantages were already slipping away in 2010 due to normal market behaviour including increases in nonChinese production and processing capacity and innovations that have contributed to reducing demand for some rare earth elementsAnalysts have said China appears apprehensive of targeting the minerals just yet possibly fearful of hastening a global search for alternative supplies of the commodities 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 situationCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updates