Why won't China `fire a shot` on rare earths in the trade war with the US? 0
(Dan Tri) – Observers say China may have reasons not to turn rare earths into a `weapon` in the trade war with the US.
A rare earth factory in Inner Mongolia, China (Photo: Reuters)
Last week, Chinese media published a series of articles, citing the opinions of domestic experts, about how Beijing could use rare earths to retaliate against US attacks in the trade war between the two economies.
Because the US is heavily dependent on rare earth products from China, this move could seriously affect US technology, defense, and manufacturing industry.
However, experts believe that China has more than one reason not to use this card with the US.
China temporarily stopped exporting rare earths to Japan in 2010 when the two countries were involved in maritime tensions with Tokyo detaining a Beijing captain.
Although Japan released the Chinese soon after, Tokyo began looking for other sources of rare earth to cut off as much dependence on China as possible for this commodity.
After 5-7 years, Japan began sourcing from mines outside of China and began to gradually shift to importing this material from here.
Beijing understands that cutting the supply of one raw material to another country will ultimately be detrimental to its own industry.
`China realizes that other countries will do like Japan if they `weaponize` and ban rare earths,` said Ryan Castilloux, managing director of rare earth consulting firm Adamas Intelligence (Canada).
Kokichiro Mio, an expert on Chinese economics at the NLI research institute (Japan), told AFP that China’s suspension of rare earth exports to the US will `prompt Washington to find alternative sources of supply`.
Rare earth mine in Inner Mongolia (Photo: Reuters)
According to Mr. Castilloux, China may use rare earths to force the US to temporarily return to negotiations due to the important role of this material in the US manufacturing industry.
`This seems to show that China’s hands are tied in the war and they have to use the `nuclear button` of rare earth (to bring the US back to the negotiating table),` the expert said.
“China may cause some disruption in the supply of the above raw materials to show the US that they are serious in their warnings.
However, because China has warned that it will use this `card`, the US has begun planning to find other sources of supply to be more independent from China regarding rare earths.
Mr. Castilloux said that by threatening the US, China has also unintentionally alerted other countries to seriously consider Beijing’s role in their supply chains.
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