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China Issues New Threat in Trade War

Supply of rare earth minerals could be cut off
By Newser Editors and Wire Services
Posted May 30, 2019 4:11 AM CDT
Updated May 30, 2019 6:54 AM CDT
Workers use machinery to dig at a rare earth mine in Ganxian county in central China's Jiangxi province.   (Chinatopix via AP)
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(Newser) – Facing new trade sanctions and a US clampdown on its top telecommunications company, China issued a pointed reminder Wednesday that it has yet to unleash all its weapons in its trade war with the Trump administration. Chinese state media warned that Beijing could cut America off from exotic minerals that are widely used in electric cars and mobile phones. The threat to use China's rich supply of so-called rare earths as leverage in the conflict has contributed to sharp losses in US stocks and sliding long-term bond yields, the AP reports. The nationalistic Chinese newspaper Global Times warned that China has plenty of ways to retaliate against the United States, including the threat of cutting off supplies of rare earth minerals. China last year produced 78% of the world's rare earths, according to researchers at Bank of America Merrill Lynch.

If the US fails to exercise restraint, it will see that "China is far from running out of cards, and we have the will and determination to fight the US to the end," the paper's editorial said. China has used rare earths as a cudgel before. Five years ago, the World Trade Organization slapped down China's attempt to restrict the export of rare earths during a dispute with Japan, rejecting its claim that it just wanted to conserve supplies. Scott Kennedy at the Center for Strategic and International Studies, however, says the threat has lost much of its power. First, users of rare earths have stockpiled the minerals for a "rainy day," he says. Second, they also have figured out how to "use less rare earth to achieve the same results" in products like lasers and magnets. And third, different minerals and chemicals are increasingly being used as rare earth substitutes. (Huawei is challenging Washington's "illegal action.")


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