China might use rare earth to strike back against U.S. in trade war: reports

Moderates feel the impact on the US will be limited

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A restaurant in China's Guangzhou Province says U.S. customers will have to pay 25% more in retaliation against U.S. tariffs.

A restaurant in China's Guangzhou Province says U.S. customers will have to pay 25% more in retaliation against U.S. tariffs. (By Associated Press)

TAIPEI (Taiwan News) – A picture of Chinese President Xi Jinping (習近平) and top trade negotiator Vice Premier Liu He (劉鶴) visiting a rare earth facility in Jiangxi Province Monday (May 20) has led to speculation Beijing might use the precious commodity to strike back at tariffs in its trade war with the United States.

Since the dispute started, it was the first time the Chinese leader had been shown touring an industrial facility, and Liu’s presence also suggested a link with possible action against the U.S., the Liberty Times reported.

Because China occupies a unique position as a key producer and collector of rare earth, it could use the materials as a bargaining chip, the reports said. The company he toured was specialized in the research, development and sale of rare earth.

Supporters of a harder Chinese line against the U.S. tariffs have named three bargaining chips favoring China, namely U.S. debt, rare earth and U.S. businesses in China.

However, moderate voices feel that any Chinese sanctions are unlikely to bite hard, and it would therefore be better if Beijing just dragged its feet, the Liberty Times report said.

In the sector of rare earth, the U.S. is now working more closely with other producers of the materials, trying to reduce its dependence on China.