Checkpoint Asia

China’s Top Economic Planner Refuses to Rule out Playing Rare Earths Card

Instead says is studying how to best use their "special value"

  • The National Development and Reform Commission has again hinted that it may block America’s access to the strategic resources as the trade war drags on
  • China produces 90 per cent of world’s rare earths and has warned it will not allow them to be used to ‘curb country’s development’

China’s top economic planning agency has once again declined to rule out the use of rare earths as weapon against the United States, as relations between the two sides continue to deteriorate.

Meng Wei, a spokeswoman for the National Development and Reform Commission, said on Monday that China, which makes up 90 per cent of the global supply of rare earths, was “promptly studying” measures to utilise the “special value of rare earths as a strategic resource”.

These included steps to improve industry competitiveness and intellectual property protections, as well as acting to curb illegal production and address environmental concerns, she said.

“We firmly oppose anyone who wants to use products made from China’s rare earth resources to curb China’s development,” Meng said, repeating an ambiguous warning the agency used late last month when asked whether the metals would become part of the months-long trade war.

Chinese rare earth stocks have soared as investors bet that Beijing will restrict exports of the raw materials – which are used in both consumer electronics and military equipment – as a retaliatory measure against the US.

The two countries have levied billions in tariffs on each other’s goods and their confrontation has also spilled over into the technology sphere after Washington blacklisted the Chinese technology giant Huawei over national security fears.

China has yet to officially threaten to use rare earths as a bargaining tool, but most American imports came from China last year.

According to the US International Trade Commission, China’s trade in the minerals with the US reached nearly US$92 million in 2018.

The reform commission has held three symposia in recent weeks to solicit suggestions from industry specialists.

Domestic experts urged the agency earlier this month to consider “tightening export controls and establishing a more thorough inspection mechanism for exports” after President Xi Jinping visited a major rare earths facility in Jiangxi province the previous month.

An commentary from the Communist Party’s mouthpiece, People’s Daily, also warned that Beijing would not agree to the US using “products made from rare earths exported from China to curb and suppress China’s development”.

The US government has also made it clear it was aware of the “strategic vulnerabilities” caused by its dependency on imported rare earths.

In a 50-page report published earlier this month, the US Department of Commerce outlined a series of steps to boost its own domestic supplies of rare earths, noting that it relied mainly on foreign sources to supply 31 of the 35 minerals deemed “critical” by the government.

On Monday, Chinese state-run tabloid Global Times cited industry insiders as saying that US military equipment companies were likely to face restrictions in accessing Chinese rare earths.

In a tweet, the newspaper also said: “China should work out a list of foreign end users [of] Chinese rare earths.”

China was accused of blocking rare earth exports to Japan in 2010 after a long-standing territorial dispute about a disputed island chain flared up.

Source: South China Morning Post