People’s Daily, the official state newspaper of the Chinese Communist Party, on Wednesday threatened to cut back on its exports of rare earth metals as a result of the ongoing U.S.-China trade war. Rare earth metals are used in dozens of technological products, such as smartphones, wind turbines, electric vehicles and military weapons.
“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!” said the People’s Daily in a commentary, as reported by CNBC.
The language of the article is particularly inflammatory. The phrase, “don’t say we didn’t warn you,” has been used two times previously by the People’s Daily in the context of conflicts that broke out into war, before the Chinese-Indian border war in 1962 and the China-Vietnam War of 1979.
The Chinese share of the U.S. rare earth imports is currently at 80%. China produces over 70% of the globe’s rare earth metals and reportedly holds 40% of its total reserves. The U.S. global market for rare earth metals is $70 billion.
The Pentagon has responded to the CCP newspaper’s threat, saying, “The department continues to work closely with the president, Congress and the industrial base to improve U.S. competitiveness in the mineral market.”
The Chinese government reportedly has become increasingly dissatisfied with President Donald Trump’s restrictions on the Chinese telecom giant Huawei. The Communist regime accused the U.S. government of committing “economic terrorism.”
The rare earth threat is seen as a direct retaliation for the Huawei embargo. Huawei is seen as a chief rival to U.S. technological and wireless dominance. This Tuesday, a statement from a Chinese official heightened the tensions, cautioning against the United States using technology made from these metals against Chinese development.
President Trump has attempted to justify his ban on Huawei not only economically but also in terms of national security, stating, “Huawei is something that’s very dangerous. You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous.”
Huawei has been accused of being too tightly connected to the Chinese government and a security liability. Timothy Heath, senior international defense research analyst at the RAND Corporation, warns that Chinese espionage could be facilitated with Huawei technology.
“The Chinese state has the authority to demand tech companies like Huawei turn over useful information or provide access to the communications and technologies owned and sold by Huawei,” he told Forbes.
News of this possible Chinese retaliation has paid off, at least in the short term, as rare earth miners have seen stock exchange gains as high as 15%.
However, there is also evidence that China’s threat could prove to be ineffective. Diplomat Hosuk Lee-Makiyama pointed out that China has already restricted or placed tariffs on dozens of types of U.S.-made goods. “What does China have left to retaliate with?” he asked.