China to make full use of rare-earth card in containing US: analysts

By GT staff Source:Global Times Published: 2019/6/4 22:25:21

Mining of rare earths is conducted in Baiyunebo, North China's Inner Mongolia Autonomous Region on July 16, 2011. File photo: VCG

The US Department of Commerce (DOC) released a report Tuesday, stating that the US government departments will coordinate in policies to foster domestic supplies of rare earth minerals so that its crucial industries won't be disrupted by a cut-off of supplies. 

The government notice came after China's top economic planner held a meeting soliciting opinions from Chinese rare earths experts who suggested Beijing move to curb exports of its rare-earth minerals. 

A wide range of US manufacturing, from semiconductors, electric vehicles to planes and missiles, rely on importing rare earths from China for production. And more than 25 percent of its rare-earth supplies came from China in 2018, said the United States Geological Survey. 

"The US is heavily dependent on foreign sources of critical minerals and on foreign supply chains resulting in the potential for strategic vulnerabilities to both our economy and military," said the DOC report.

China's top economic regulator invited industry analysts to give clues about further strengthening rare-earth export controls, which, industry insiders said, is a major effort in making good use of the rare-earth card in containing the US amid an escalating trade war. 

The National Development and Reform Commission (NDRC) convened a conference on Tuesday to study upgrading the domestic rare-earth sector, which has huge growth potential. 

With tangible resource advantages, China's rare-earth sector has been progressing toward a high-quality and technology-driven model. However, as illegal mining and production still exist, a large portion of rare-earth products are still low- and middle-level, and the value of rare-earth resources has not been fully exploited, according to a statement on the NDRC' website. 

Analysts pointed out that rare earths are scarce resources that can't be regenerated, and China should strengthen full-scale supervision of rare-earth production. They suggested that authorities should carry out the rectification of production order and crack down on illegal mining activities.

Meanwhile, regulators should also strengthen export controls on rare earths and establish a traceable review mechanism for exports.

Liu Yiqiang, deputy director of research and development department of the National Center of Quality Supervision and Inspection for Tungsten and Rare Earth Products, urged earlier that the Chinese government should issue guidelines on rare-earth exports and mining.

"Heavy rare earths are indispensable components in lots of high-tech applications in the US. If China uses the rare-earth card, it could also play a role in containing the US strategy…  China should make good use of such means," Liu told the Global Times.

The export volume of rare earths will surely decrease with tightened export controls, and might influence US' domestic rare-earth supply, analysts said. 

"China will of course ensure the supply of global demand, out of its responsibility as the biggest rare-earth exporter in the world," Wu Chenhui, an independent rare-earth analyst, told the Global Times on Tuesday.

Considering the irreplaceable role of heavy rare earths in the military sector and in high technology, China should give more protection to such strategic assets, some industry insiders suggested.

"The US does not have abundant heavy rare earths as China does, and China also represents world-leading technology in rare earth extraction," an industry insider, who spoke on condition of anonymity, told the Global Times. 

"We have the 'killer card' and we're actively pushing forward upgrading and downstream high-end applications. These could have a big impact on US industries," he said.

The NDRC said in a statement that the domestic rare-earth sector should transform from one that is resources-reliant to one that is innovation driven, with full supply chain advantages. 

China indicated on May 28 that it may weaponize its rare earths in an escalation of trade war with the US. 

"If any country wants to use products made of China's rare earth exports to contain China's development, the Chinese people would not be happy with that," said a spokesperson from the NDRC. 

A stricter and regulated rare-earth export mechanism is also fully in line with global laws and rules, as well as to benefit the healthy development of global rare-earth industry chain, said Wu, the analyst.


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