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China amps up threat to curb rare earth exports in U.S. trade clash

May 28, 2019

Chinese officials have made their most explicit threat to date that they are willing to use their near-monopoly on so-called “rare earth” minerals to force President Trump to back off on his trade war with Beijing.

China dominates global supply lines for the rare earth minerals, many of which are crucial to the functioning of many modern high-tech products, from wind turbines and advanced batteries to lasers and microphones.

“If any country wants to use products made of China’s rare earth exports to contain China’s development, the Chinese people would not be happy with that,” a spokesman for China’s National Development and Reform Commission (NDRC), told the state-controlled Global Times news website Tuesday, when asked if Beijing would use its rare earth exports in the trade war.

Mr. Trump has imposed hefty tariffs on Chinese goods in a bid to bring down a huge bilateral U.S. trade deficit and to force China to change practices and laws the U.S. and other countries say put their exporters at a huge disadvantage.

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.

U.S. industries received nearly four-fifths of their rare earth supplies from China between 2014 and 2017, and despite a push to develop new sources and suppliers, those industries remain heavily dependent on China to this day.

President Xi Jinping last week made a high-profile visit to a Ganzhou high-tech firm that specializes in rare earth research and development, the Xinhua news agency reported, a visit widely seen as a tacit warning to the U.S. and a reminder of China’s market dominance.

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

But, the official added, “we adhere to the principle that rare-earth resources give priority to domestic needs.”

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