China is exploring whether it can hurt US defense contractors by limiting supplies of rare earth minerals that are critical to the industry, the Financial Times has reported.
Industry executives have said that Chinese government officials asked them how badly companies in the US and Europe would be affected if China restricted the export of rare earth minerals during a bilateral dispute, the Financial Times reported, citing people that it did not identify.
The move throws the spotlight back on the group of elements that are used in everything from smartphones to fighter jets, and have previously been a focus in the deteriorating trade relationship between China and the US.
China controls most of the world’s mined output, with an even tighter hold of the processing industry, leaving US industries with few avenues to immediately secure short-term supply if curbs were enacted.
The Chinese Ministry of Foreign Affairs did not immediately respond to a request for comment on a public holiday, while calls to the Chinese Ministry of Industry and Information Technology went unanswered.
The Chinese government last month issued draft guidelines for the sector, with proposals including firms abiding by export regulations, and the possibility that the nation restrict or suspend exploration and processing of rare earths to preserve natural resources and protect the environment.
The specter of export curbs arose in 2019 amid deepening US-China trade tensions.
China accounts for 80 percent of rare earth imports into the US and Beijing had prepared a plan to restrict shipments as a way to target Washington. While those restrictions were never enacted, the threat pushed the US government to seek out ways to cut their reliance on a single source of supply.
Last year, then-US president Donald Trump signed an executive order aimed at expanding domestic output of rare earth minerals, a year after the US Department of Defense was ordered to spur the production of magnets.
The US also awarded Lynas Rare Earths Ltd, the biggest producer outside China, a contract to boost processing capabilities.
Trump’s administration took a wide range of actions to thwart China’s efforts to dominate numerous high-tech industries, with US President Joe Biden yet to change many of those policies.
Biden, in his first conversation as president with Chinese leader Xi Jinping (習近平), spoke of his concern about Beijing’s “coercive and unfair economic practices,” as well as human rights abuses in the Xinjiang region.
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