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    FILE - In this Nov. 9, 2017 file photo, an American flag is flown next to the Chinese national emblem during a welcome ceremony for visiting U.S. President Donald Trump outside the Great Hall of the People in Beijing

    China Might Use Rare Earth Minerals as Trump Card in Trade War - Reports

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    An official from the Chinese economic planning agency issued a warning that products using China’s rare earth minerals should not be used against China’s development, a comment that has been interpreted as a veiled threat aimed at the US and its technology industry.

    The comment, reported by CCTV News, was made after Chinese President Xi Jinping visited a rare earth mining and processing facilities last week.

    “You suggested that rare earths could become one of China’s countermeasures against the US’s unwarranted suppression…What can I tell you is that if anyone were to use products that are made with the rare earths that we export to curb the development of China, then the people of [south Jiangxi province where rare earths are mined], as well as all the rest of the Chinese people, would be unhappy,” the Chinese official said in an interview.

    Hu Xijin, the editor-in-chief of the Global Times, also highlighted how the country may seek to use its position as a leading supplier of rare-earth materials if the trade war escalates.

    Rare earths represent a critical component for the manufacturing and development of high-tech products such as smartphones and electric vehicles. According to a report from Bank of America Merrill Lynch, cited by the Business Insider, China is the leading supplier of rare earths and accounts for 78% of global production, while owning 40% of global resources of rare earths. Bank of America strategists noted that the dominance of China is due to the fact that its government has classified rare earths as a strategic resource and has emphasized exploration and extraction of the raw materials for about 100 years.

    A 2018 US government report entitled “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States” has highlighted the Defense Department's reliance on China's supply of the elements.

    READ MORE: Bannon Urges Trump to Continue Pressure on China with Tariffs

    "Rare earths are critical elements used across many of the major weapons systems the US relies on for national security, including lasers, radar, sonar, night vision systems, missile guidance, jet engines, and even alloys for armored vehicles," the report said.

    However, Marc Chandler, global market strategist at Bannockburn Global Forex, told CNBC that the threat wasn’t made officially by the Chinese government and won’t have any substantial change on the global market, and, what’s more important, the US only imported about 4,000 tons of rare earths, worth about $175 million.

    “The problem is most of the rare earths we import are embedded already in the technology. If we buy a computer, they are already in it. That makes it harder for China to cut us off,” the analyst added.

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    US-China trade war, rare-earth metals, minerals, China, United States
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