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 irony, and that is an understatement, is that the US has rare earth deposits capable of meeting national security needs, and ending the reliance on China", McGroarty said.
Chinese authorities haven't officially announced they will restrict rare earths sales to the United States, but media outlets, for instance the People's Daily, heated up tensions by pointing at Washington's somewhat uncomfortable reliance on those elements from China, which accounts for roughly 95 percent of global output, per Bloomberg. "The answer is no mystery", People's Daily stated in a commentary.
China is threatening to restrict USA access to rare earth minerals, which are used in the development of many high-tech devices.
"We advise the U.S. to not underestimate China's ability to safeguard its own development rights and interests, and not to say we didn't warn you".
"You asked whether rare earths will become China's countermeasure against unwarranted suppression from the US".
The expression "don't say we didn't warn you" is generally only used by official Chinese media to warn rivals over major areas of disagreement, for example during a border dispute with India in 2017 and in 1978 before China invaded Vietnam.
The industrial chain between China and the United States is highly integrated and highly complementary, and there are no winners in a trade war, it said.
"Nevertheless, China will mainly use it for defence", it added, noting that while China might incur losses from a ban on exports, the United States would suffer more.
Huawei has rejected the criticism and, filing a lawsuit in a federal court in Texas, said that the United States unfairly singled out the company.
But China is likely to use a rare earths ban as a policy tool if the U.S. continues to be tough on trade and Huawei, he told AFP. -China Relations, spoke to CBSN about the digital cold war developing between the two countries.
If China does clamp down, they are likely to be selective because the country wants to be seen as playing by World Trade Organization rules, said Arthur Kroeber, head of research at Gavekal Economics and editor-in-chief of China Economic Quarterly, on a call with clients this week. It ultimately scrapped its export quota system after losing the case.
Shares in rare earth companies surged in the Shanghai and Shenzhen stock markets on Wednesday.
President Trump signed the National Defense Authorization Act for 2019 previous year; it limited the flow of federal dollars to the Chinese companies Huawei Technologies Co., the world's largest maker of telecommunications equipment, and ZTECorp.
But China for years has used national security considerations to block major U.S. technology companies, including Google and Facebook, from operating in its market.
Such restrictions have in recent years fuelled calls from within some parts of the USA business community for Washington to pursue more reciprocal policies with Beijing.
President Xi Jinping visited rare earth-related businesses in southeastern Jiangxi province earlier this month.
FILE PHOTO: Samples of rare earth minerals from left, Cerium oxide, Bastnasite, Neodymium oxide and Lanthanum carbonate are on display during a tour of Molycorp's Mountain Pass Rare Earth facility in Mountain Pass, California June 29, 2015.
China accounted for 80 per cent of rare earth imports between 2014 and 2017 to the United States.
Rare-earth minerals are important strategic resources but China had never thought of using the minerals as leverage to hit the US.