Chinese state media dangled Wednesday the threat of cutting exports of rare earths to the United States as a counter-strike in the trade war, potentially depriving Washington of a key resource used to make everything from smartphones to military hardware. The warning is the latest salvo in a dispute that has intensified since President Donald Trump ramped up tariffs against China and moved to blacklist telecom giant Huawei earlier this month, while trade talks have apparently stalled.
Huawei stepped up its legal battle on Wednesday, announcing it had filed a motion in US court for summary judgment to speed up its bid to overturn US legislation that bars federal agencies from using its equipment over security concerns.
Beijing had already dropped a big hint that rare earths could be in the firing line by showing images last week of President Xi Jinping visiting a rare earths factory in Ganzhou, central China. State media made it clearer on Wednesday. "Will rare earths become China's counter-weapon against the unprovoked suppression of the US? The answer is not mysterious," warned The People's Daily, the Communist Party mouthpiece. "We advise the US to not underestimate China's ability to safeguard its own development rights and interests, and not to say we didn't warn you." The state-owned Global Times warned in an editorial that the "US will rue forcing China's hand on rare earths". "It is believed that if the US increasingly suppresses the development of China, sooner or later, China will use rare earths as a weapon," the nationalist tabloid said.
Shares in rare earth companies surged in the Shanghai and Shenzhen stock markets on Wednesday. An unnamed official from the National Development and Reform Commission, China's state planner, had issued a cryptic warning late Tuesday. "What I can tell you is that if anyone wants to use products made from our rare-earth exports to curb and suppress China's development, I'm sure the people of Ganzhou and across China will not be happy with that," the official said in answers to questions published by state media. The official said rare-earth resources should "serve domestic needs first," but China is also willing to meet the "legitimate needs of countries around the world."