China ensuring rare earth dominance crucial in trade war – Global Times
|Amid a slew of trade positive headlines across all the corners, Global Times recently rolled out the news that mentions China’s dominance in rare earth minerals and the same could be used as a bargaining chip in its trade talks with the United States (US).
Key quotes
China may not need to play the rare-earth card for the time being, but it is still essential to keep vigilant and to ensure the deterrent effect of this crucial bargaining chip.
According to a recent statement from the Ministry of Industry and Information Technology, China raised its annual rare-earth mining quota to 132,000 tons, 10 percent more than last year's level and a new record high.
While the move alleviates concerns that China, the world's largest supplier of rare-earth minerals, may cut supplies, some critics believe that by raising the quota, China has actually made it more difficult for the US and other countries to develop their own rare-earth industries.
Media reports indicated that the US had talks with some rare-earth mines in Africa, and just last week, US and Australian officials agreed to formalize a partnership to boost the supply of rare-earths from outside China.
While it's never too late for a person to start all over again, it may be too late for the US to catch up with China in the rare-earth sector, an effort that is expected to face great difficulties and challenges, including but not limited to China's dominant influence in the industry.
FX implications
Although no major market reaction could be witnessed to the news, this might push the Trump administration away from its recent optimism surrounding the phase one trade deal with China. In doing so, safe-havens like Japanese yen (JPY) and Gold may recover their recent losses while the AUD/USD pair could also bounce off multi-week low.
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