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Fears rise China could weaponise rare earths in US tech war

China is one of the world’s major suppliers of rare earth metals, a group of 17 elements that are widely used in high-tech products ranging from flat-screen TVs to lasers and military equipment.

world Updated: May 22, 2019 20:33 IST
Sutirtho Patranobis
Sutirtho Patranobis
Hindustan Times, Beijing
US,China,earth
Xi was accompanied by vice-premier Liu He, the top negotiator with Washington amid the ongoing dispute.(HT Photo)

President Xi Jinping’s visit earlier this week to a rare earth firm in east China’s Jiangxi province has triggered sharp speculation whether the strategic sector will be included in the escalating Sino-US trade war.

China is one of the world’s major suppliers of rare earth metals, a group of 17 elements that are widely used in high-tech products ranging from flat-screen TVs to lasers and military equipment.

According to some estimates, China is sitting on 90 percent of the world’s rare earth reserves.

China’s rare earths exports, a Reuters report said, have been spared from recent tariffs by the US, which has decided not to impose import duties on those and some other critical minerals from China as part of the trade war.

“Beijing, however, has raised tariffs on imports of U.S. rare earth metal ores from 10 percent to 25 percent from June 1, making it less economical to process the material in China,” the report said.

Xi’s visit to the JL MAG Rare-Earth company as well as the development of the rare earth industry in the city of Ganzhou could be an indication that Beijing is well aware of the power of the element of rare earth in the ongoing tit-for-tat trade war – and could be ready to deploy it.

Xi was accompanied by vice-premier Liu He, the top negotiator with Washington amid the ongoing dispute.

Brief reports on the visit didn’t give details or mention the trade war but the official news agency, Xinhua’s report in Chinese pointed out the importance of rare earth to China, calling it “industrial vitamin, “industrial gold” and “mother of new materials”.

It also said that rare earth is an important element that cannot be regenerated.

In March, China announced that the first batch of quota for rare earths totals 60,000 tonnes, about half the quota set for 2018, according to a circular jointly issued by the Ministry of Natural Resources and Ministry of Industry and Information Technology.

Of the total, 50,425 tonnes were allocated for light rare earths, with 9,575 tonnes for medium and heavy rare earth metals, the Xinhua reported.

“China has by far been the largest source of imported rare earths into the US for a number of years, totalling almost US$92 million in 2018, according to the US International Trade Commission. Japan, the US’ second largest source, contributed US$23 million worth of imports in the same year,” the Hong Kong-based South China Morning Post reported.

Interestingly, Xi visited a monument in Yudu, in the same province, which marked the start of the Communist Party’s Long March 85 years ago. It could be interpreted as the Communist party’s general secretary’s message of unity and endurance to the Chinese amid trade war.

The ministry of foreign affairs, however, advised against “over interpreting” Xi’s visits.

“It’s only normal for the Chinese leader to pay a domestic field trip and do research on relevant industrial policies. I hope you will not over-interpret that.

To the China-US economic and trade relations, just like I said earlier, they must be based on mutual respect, equality and mutual benefit,” spokesperson, Lu Kang said.

First Published: May 22, 2019 20:32 IST