Trade war: China plans to counterattack with key inputs for technology

BEIJING.-

China

is seriously considering limiting exports to

United States

rare earth elements, 17 chemical elements used in consumer electronics and military equipment, according to the editor-in-chief of
Global Times from Beijing.

Rising tension has raised fears that Beijing will use its dominant position as a supplier of rare metals as a weapon in the US-China trade war.

A senior official of China's National Commission for Development and Reform told Xinhua on Tuesday that Beijing would give priority to domestic demand for rare metals, but that it would respond to a reasonable request from other countries.

The head of China's national planning agency did not directly answer the question whether Beijing would limit rare earth exports to the United States, said Global Times editor Hu Xijin. .

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"Based on what I know, China is seriously considering restricting exports of rare metals to the United States, and it may also take other countermeasures in the future."

Global Times is not one of China's official media, but it's a well-read tabloid published by the Chinese Communist Party's newspaper.

The trade war between Washington and Beijing
has burned a new stage with the technological duel with Huawei, the Chinese manufacturer of smartphones,
whose existence is threatened after the embargo on the US "microchips" and Google's decision to sever ties with this group.

But just as Beijing depends on US technology, Washington, like the rest of the world, is heavily dependent on some Chinese exports, such as rare earths.

Chinese President Xi Jinping visited a rare metals company in southern China last week, media reports said, suggesting Beijing was considering using chemicals in the US-led trade war. United. China accounted for 80% of US imports of rare metals between 2014 and 2017, which excluded them from recent tariff increases.

"Rare earths are an important strategic resource," said Xi Jinping, according to the Xinhua official news agency.

What are the rare earths

China produces 90% of the world's rare earths, a set of 17 key metals used in the production of state-of-the-art products, such as smartphones, plasma screens and electronic vehicles.

Rare earths are "strategic metals" because of their electromagnetic properties, fundamental to the technology industry. China therefore has a "strategic weapon", according to the annual report on Cyclope raw materials, and will not hesitate to use it.

In 2010, in retaliation for a territorial dispute, the Chinese authorities have already halted rare earth exports to Japan. Japanese technology companies, highly dependent on exports of neighboring energy, have been hit hard.

To preserve these resources, Beijing has already established export quotas for rare earths. The United States, the European Union and Japan brought this practice before the World Trade Organization (WTO), which proved them right.

However, the production quotas established with the argument of environmental protection are still in force, because the manufacture of these metals is very polluting. "We can not exclude China from the growing pressure exerted on the United States by environmental problems," said Kokichiro Mio, China specialist at the Japanese research institute NLI.

L & # 39; s impact

A rare earth seizure "would affect a number of strategic industries" in the United States, such as robotics, computer science, aeronautics or medical lasers, says badyst David Lennox from Fat Prophets.

Although the impact is not "immediate", it would have repercussions because "there is no real substitute for rare earths," he says.

"China does not want to come into direct conflict with the United States," but rare earth is used to "exert psychological pressure," said political badyst Chen Daoyin of Shanghai.

The Asian giant is not only its main producer, but has also invested in recent years in many rare earths out of China, for example in the field of Kvanefjeld in Greenland, considered the second largest in the world, according to the report Cyclops.

Reflecting US vulnerability, the rare earths, as well as drugs, will be exempted from the increase in tariffs that Washington will impose on almost all Chinese products.

AFP and Reuters agencies