Meet China’s Secret Weapon in the US Trade War

This was no ordinary photo op.

Chinese President Xi Jinping visited a rare earth metal factory in the city of Ganzhou last week, sending a not-so-subliminal message to the United States amid the ongoing trade war. Flanking Xi was Vice Premier Liu, who is currently heading trade talks with the United States.

“Rare earth is not only an important strategic resource, but also a non-renewable resource,” Xi announced in prepared remarks.

Hailed as an “ace in Beijing’s hand” and “China’s nuclear option,” rare earth metals comprise of 17 rare elements (such as Cerium and Europium) that are crucial to the manufacturing of items such as batteries, smartphones, lasers, electric cars, and medical instruments.

Xi’s visit to the rare earth metal factory raises the specter that Beijing may seek to weaponize the exportation of these crucial metals in response to the Trump administration’s recent round of tariff hikes (as well as the blacklisting of tech giant Huawei).

Depending on the year (and the study), China accounts for 71–95% of all rare earth metal production, giving China potential leverage in ongoing trade discussions.

After Xi’s factory trip, shares in Apple fell, as the American tech giant is reliant on Chinese exports of these materials.