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Will China-US dispute extend to rare earths?

Editor’s Note: With China-US tensions continuing to rise, many speculate that China may leverage rare earths to countermand the United States’ moves. Will the China-US rare earth supply chain be disrupted, if not broken? Two experts share their views with China Daily’s Pan Yixuan on the issue. Excerpts follow:

Export for rare earths needs stricter regulations

Having identified China as a major strategic rival, the US has not only intensified its attacks against China, but also tried to stigmatize it by calling the novel coronavirus the “Chinese virus”. Given the US’ provocative moves and the severe security environment in the international community, China needs an export control mechanism for “strategic resources” including rare earths, which it can use as a countermeasure against the US.

Rare earths such as yttrium, scandium, neodymium and samarium are critical elements and “strategic resources” used in high-tech devices-from consumer products like mobile phones and computer hard drives to sophisticated military equipment.

China could control the export of the strategic resources based on civilian and military use, which means it should have two sets of export regulations-one for export of rare earths for civil use, and the other for military use.

Regulations for the export of rare earths for civilian use should follow the rules of free trade, but they should be accompanied by a verification system for the use of resources to ensure they are actually meant for civilian use. And those parties that import rare earths from China for civilian use and yet use them in the military sector should be held accountable.

On the other hand, we should have our own annual reports to evaluate different countries’ security risks to China, and the export of rare earths for military use should be made based on the security risks the importing countries pose to China. To countries and regions that are rated as high risk, China can reduce or cut off exports of rare earths, in accordance with the World Trade Organization national security exception rule.

Moreover, there should be interdisciplinary coordination in working out a specific rare earth export policy. For instance, experts from different fields should work together to prepare an annual global security report and, accordingly, determine the strategic resources’ export policy. Strengthening multi-sectoral collaboration will also improve China’s strategic resource management and export supervision, which can curb the smuggling of rare earths, and help devise regulations for rare earth mining, which is environmentally-costly. In stark contrast to some powers resorting to unilateralism, China can strengthen regulation on rare earth fully in line with international rules.

Jin Baisong, an economist with expertise on the rare earth industry

China values its role as a reliable supplier

Rare earths are international merchandise. As a country with 30 percent of the world’s rare earth reserves and accounting for two-thirds of global supply, China has been a trustworthy supplier. And in the same spirit of win-win cooperation, it is further improving its business environment to attract more global investment.

Yet there have been rumors that China has sharply reduced the supply of rare earths to certain countries. In response, the Ministry of Commerce said the plunge in the export of the critical minerals in the past seven months is due to the novel coronavirus pandemic, not because China has reduced supply to the US.

Unlike the US that threatens to impose sanctions and ban the export of many items, China values its international image and plays by the rules of the global market-and it will take countermeasures only when another country interferes in China’s internal affairs.

Therefore, countries should cooperate with China to make the international trade environment stable, safer and predictable, instead of creating troubles for China, and thereby disturbing the entire global supply chain.

Thanks to its advanced separation and purification technique for rare earths, China has a cost advantage in rare earth mining and processing. As such, without achieving technological breakthroughs, any country trying to establish a rare earth production chain to bypass or isolate China in the rare earths sector is likely to suffer huge losses. This is not to say that other countries should not develop production chains for rare earths or achieve breakthroughs in their separation and purification.

China has always believed in cooperation and common development, and that’s why even at a time when the world is politically and economically turbulent, it remains committed to keeping the world order stable and secure.

Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation

These are the personal views of the experts and don’t necessarily reflect those of their institutions or China Daily.

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