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China might restrict exports of rare earths, which are essential to the manufacture of consumer electronics, semiconductors and military equipment. Photo: AFP

China issues veiled rare earths threats after US ups trade war ante with Huawei blacklist

  • Foreign ministry says warning from top economic planning agency that government will prioritise domestic demand is sound and valid
  • Communist Party mouthpiece also warns US not to underestimate China’s resolve to hit back

China has issued veiled threats that the country could retaliate against the US by restricting rare earths exports after US President Donald Trump imposed new measures to cut off the supply of chips and processors to Chinese telecoms giant Huawei.

Speaking at a regular news briefing, foreign ministry spokesman Lu Kang said an earlier warning by the country’s top planning agency on rare earths exports was sound and valid.

The National Development Reform Commission said in a statement late on Tuesday night that while China adhered to the principles of “open, coordinated and sharing” in its development of rare earths, the domestic industry would get supply priority.

“If anyone wants to use the products made from our rare earth exports to try to counter China’s development, then the people from the southern Jiangxi Communist revolutionary base would not be happy, and the people of China will not be happy,” the statement said.

China accounts for more than 90 per cent of rare earths exports. Photo: Reuters

On Wednesday, Lu said the NDRC “is a Chinese government body – its statement is certainly authoritative”.

The NDRC statement was the first official comment by the Chinese government on the controversial issue amid growing speculation that China might weaponise its rare earths in its trade war with the United States.

But Lu’s remarks were in contrast to his answer last week when he was asked to comment on a high-profile visit by President Xi Jinping to a rare earths producer in the eastern province of Jiangxi during which the Chinese leader emphasised the strategic value of the metals.

“Inspection by China’s state leaders to relevant industries is very normal,” Lu said then. “Please do not read too much into it.”

Lu’s tougher comments echoed a more strident rallying call carried in China’s official media on Wednesday warning the US not to underestimate Beijing’s resolve in striking back, and that the US had “completely overestimated its ability to manipulate the global supply chain”.

“The Chinese people would never agree to the US using products made from rare earths exported from China to curb and suppress China’s development,” Communist Party mouthpiece People’s Daily said in a commentary.

“We remind the US not to underestimate China’s ability to defend its rights to development and to remember not to blame anyone for not warning them.”

China will not rule out using rare earth exports as leverage in trade war with US

China accounts for 90 per cent of the global supply of the minerals, which are critical to the manufacture of consumer electronics, semiconductors and military equipment.

China and the US have battled over trade for nearly a year, casting a long shadow over the world economy and straining ties between the two countries.

Last week, the White House added Huawei Technologies, the world’s biggest telecommunications equipment manufacturer, to a trading blacklist. Several global companies have since suspended business with the Chinese firm, raising fears that the ban will seriously undermine China’s burgeoning chip industry.

Meanwhile official Chinese news agency Xinhua said there were some “delusional” American politicians who thought they could curb China’s rise through limiting technology cooperation with China.

Explainer: Can the US take back some control of rare earths from China?

Hawkish state-run tabloid the Global Times ran a separate article saying the comments by the NDRC on Tuesday were a “clear signal” that it was only a matter of time for Beijing to play the “rare earths card” in its feud with the US.

“China understands clearly that the complex global supply chain comprises industries from every country in the world,” it said. “If China cuts off the exports of rare earths to the US … then China will also suffer but the impact felt by the US would be much more serious.

“We believe if the US continues to pile pressure on us, it would be just a matter of time that we will weaponise our [rare earths exports].”

China was accused of making a similar move in 2010 when tensions with Japan rose over a territorial dispute in the East China Sea.

Observers say Beijing risks undermining its trading reputation and other trading partners might suffer if China restricts exports of the minerals.

This article appeared in the South China Morning Post print edition as: CHINA GETS TOUGHER ON RARE-EARtH MINERALS