News 31 May 2019

China has (rare earths) ‘cards to play’ – State media

Chinese state media has dangled the prospect of a ban on rare earths exports – elements essential to the development of high-tech equipment – as retaliation for the US government placing telecoms company Huawei on the Department of Commerce Entity List.

In an editorial, Xinhua said that ‘[A]s the world’s biggest supplier of such materials, China has always been upholding the principles of openness, coordination and sharing in developing its rare earth industry. While meeting domestic demands is a priority, China is willing to try its best to satisfy global demand for rare earths as long as they are used for legitimate purposes.’

But it cited a warning from an unnamed official from the National Development and Reform Commission, who said: ‘We are happy to see that the rare earth resources and related materials can be used in making all kinds of advanced products that help better satisfy the demand for a good life of people from around the world.

‘However, if anyone wants to use imported rare earths against China, the Chinese people will not agree. By making unilateral moves to contain technological development of other countries, the United States seems to have overlooked one fact: the international supply chain is so intertwined that no economy could thrive on its own.’

The editorial continued: ‘According to the U.S. Geological Survey, from 2014 to 2017 the United States imported 80 percent of its rare earth compounds and metals from China…China has reiterated its stand in promoting multilateralism and tried to avoid a trade war that hurts public interests. But if necessary, China has plenty of cards to play.’

Observers note that while earlier in the decade China ended restrictions on exports of rare earths following a World Trade Organisation rebuke, it may reimpose them, citing ‘national security’ concerns.