China's trade threats dig a hole for FTSE 100

China warns US trade war will cut it off rare earths supply

China gears up to weaponize rare earths in trade war

Xi's visit to the JL MAG Rare-Earth processing company, flanked by his chief trade negotiator Liu He, was seen as a signal that China might weaponise its rare earth exports in its negotiations with the US.

Chinese state media on Wednesday dangled the threat of cutting exports of rare earths to the United States as a counter-strike in the trade war, potentially depriving Washington of a key resource used to make everything from smartphones to military hardware.

The dependent on China for rare earth minerals used in hundreds of hi-tech products and military equipment.

The Trump administration has also angered Beijing by imposing harsh new sanctions on Chinese high-tech pioneer Huawei, which is bidding to be the lead firm in installing and operating the next-generation 5G telecommunications networks.

But Chinese state media is now suggesting that rare earth exports to the USA could be cut in retaliation for American measures, sparking fear among manufacturers.

China is shooting blanks with its threat of a rare earth minerals embargo, the most recent salvo in an ongoing trade war with the United States.

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Although the tabloid Global Times is not one of China's official media, it is widely read and is published by the ruling Communist Party's People's Party newspaper.

As the world's largest supplier of rare earths, China has always adhered to the principle of openness, coordination and sharing to promote the development of the rare earths industry.

The US Defence Department has submitted a report to Congress on rare earth minerals as it looks to reduce American reliance on China, the Pentagon said on Wednesday (May 29), amid mounting concern in Washington about Beijing's role as a supplier.

China has imposed a tariff of 25 per cent on those imports during the trade war.

Beijing, however, has raised tariffs on imports of USA rare earth metal ores from 10 per cent to 25 per cent from June 1, making it less economical to process the material in China.

- What are rare earths? Cerium, the most abundant, is more common in the Earth's crust than copper.

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Trump's move against Huawei, a rapidly expanding leader in super-fast 5G wireless technology, came as part of a trade war that he began past year over what the USA president calls China's unfair trade policies.

Rare earths have already featured in the trade dispute.

The article then went on: 'American companies have particularly high demand for rare earth products. Everything from smartphones to flat screen TVs to green energy to electric auto batteries rely on rare earth metals. Other countries that supply rare earths to the USA include Australia, Estonia, France and Japan.

The ambiguous comments by the spokesman underscored a heated debate in China over whether the country should resort to a tit-for-tat response against the USA, particularly since there are limits to retaliatory tariffs China can assess on U.S. imports.

The visit followed a USA clampdown on technology giant Huawei by President Donald Trump's administration earlier this month, and was interpreted by experts as a signal that the Chinese government is weighing restrictions on rare-earth exports. China is the biggest by far, accounting for nearly 70 per cent of global production and 40% of the world's reserves, USGS data show. China Rare Earth Holdings Ltd soared more than 40%, while Australia's Lynas Corp, the only major rare earths producer outside of China, climbed as much as 14.6%. After announcing it would increase tariffs on $60 billion worth of USA goods, China is exhausted as far as imports are concerned.

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