Import Tariffs: China to Use Rare Earth in Tariff war
IMPORT TARIFFS – In the most recent escalation of the ongoing trade war between the United States and China, the latter’s state media has warned that it could use rare earths to retaliate against the former.
Chinese state media has implied that the country could restrict rare earth sales to the United States, triggering worries over China’s role as a major supplier.
Last week, Chinese President Xi Jinping visited a rare earths plant, happening after the US imposed bans on Chinese telecoms giant Huawei Technologies Co Ltd.
The official People’s Daily, the government-backed China newspaper, emphasized the US’ “uncomfortable” dependence on rare earths from China.
On Wednesday, it published a commentary with a headline “United States, don’t underestimate China’s ability to strike back.”
“Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery,” it said.
“Undoubtedly, the US side wants to use the products made by China’s exported rare earths to counter and suppress China’s development. The Chinese people will never accept this!” it added. “Don’t say we didn’t warn you!”
Its sister paper, the Global Times, also run its own editorial, saying that an export ban on rare earths “is a powerful weapon if used in the China-US trade war.”
“Nevertheless, China will mainly use it for defense,” it said, highlighting that even if China could incur losses from a ban on exports, the US would have to suffer more.
Rare Earth Clampdown
China will try to meet global rare-earths demand as “long as they are used for legitimate purposes,” according to the Xinhua news agency’s commentary.
However, it still added that “if necessary, China has plenty of cards to play.”
The Asian country has vocally criticized the US for what it deems abuses of national security exceptions at the World Trade Organization.
On the flipside, China for year has used national security concerns as justification to block US tech companies that include Google and Facebook from operating in its market.
If China proceeds with the clampdown, analysts believe that they are going to be selective. That’s because they want to be playing by the rules of the WTO, according to an economist.
“I really think that they have a problem in htat none of the options are very good and all of them involve very significant costs to China,” said Arthur Kroeber, head of research at Gavekal Economics. “So if they’re going to do any them, they have to them extremely carefully, and I think quite selectively.”
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