Jefferson Morley | May 23, 2019
How China Could Retaliate For Huawei Ban
As the Trump administration seeks to banish the Chinese telecom Huawei from U.S. markets, China has a potent possible weapons to strike back: control of the supply of rare-earth minerals, crucial to the manufacture of oil refining, ear buds, wind turbines, and electric cars.
According to Ryan Castilloux, a strategic metals consultant quoted in Foreign Policy, China supplies about 80 percent of the rare-earth elements imported by the United States.
China has reasons not to cut off the United States, namely it could drive away other customers. But as Trump escalates his trade war with China, it may want to use it leverage on Washington.
if China does reach for what Castilloux calls the “nuclear option,” it would hammer big chunks of the U.S. economy, though the exact magnitude of such a move is difficult to estimate. The mere threat of China turning off the tap of critical industrial materials highlights a vulnerability that is increasingly worrying analysts and policymakers in Washington, Beijing, and other capitals. Globalized supply chains offer flexibility and lower costs for consumers of a wide range of products. At the same time, the central position of the U.S. dollar and U.S. financial system has streamlined trade and fueled growth. But at times of geopolitical tension, those same efficiencies can suddenly become deadly vulnerabilities—for all countries.
Welcome to “weaponized interdependence,” the superpowers’ tool for getting their way.