How to Confront with Rare Earth and Tungsten in G20?

In the new G20 summit, rare earth and tungsten will become important bargaining chips for China. On June 17th of Beijing time, Wei Meng, the spokesperson from National Development and Reform Commission of the People’s Republic of China said that “Rare earth and tungsten will become a powerful counter-measure of Sino-US trade friction.”

China has been actively maintaining the multi-faceted trading system, and China is willing to meet other countries’ legitimate needs for materials and products of these rare resources. However, China will resolutely oppose to anyone who attempts to use them to manufacture products that are used to contain and suppress China's development.

US President Donald Trump said he will meet with Chinese President Xi Jinping at the G20 summit, and representatives of the two sides will prepare a communication before the meeting. The Sino-US trade war has been on an escalated status since May. The G20 summit held at the end of June will provide an opportunity for both sides to meet, and is the most likely time to break the confrontation between China and the United States.

Rare earths and tungsten are options for China to respond to the escalation of Sino-US trade war. The power of these resources depends on the dependency level of US industry rely on them. In June 2019, a report issued by the US Department of Commerce (DOC) entitled "A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals" showed that, from 2013 to 2016, rare earths on US were completely dependent on imports, of which 78% is imported from China.

tungsten ingot image

Under the Strategic and Critical Materials Stock Piling Act of US, American government strategically reserved critical materials related to defense security. Judging from the public information of US government, US has the ability to shed its dependence on China's rare resources in the field of national defense. However, the demand for the U.S Department of Defense is not the same as the demand in the US industrial area. The " de-Chinazation " of the U.S Department of Defense is not on behalf of the US industry. Although the US Government Audit Office called on US government to attach importance to China's monopoly position in the rare materials industry chain, while US government has not taken effective measures to improve the self-sufficiency and import diversity of rare earths and tungsten. 

China's production capacity and technological advantages in refining are hard for US to catch up in short term. James Kennedy, a US expert on rare resources and president of ThREE Consulting said that: "China has locked the access to get rare earth metals, alloys, magnets and most post-oxidation globally, and China is the only country can make it in the world." Therefore, although China can’t use this advantage as trade weapons to influence the US in short term, but China can use its dominant position in this industry chain to impose immediate sanctions on the US industry that uses these resources and products.

 

 

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