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China has more weapons in US tariff war _ but do they work?

AP  |  Beijing 

Looking for ways to hit back at as a tariff fight escalates, Jinping and his economy visited a Chinese factory that processes rare earths exotic minerals used in electric cars, and other technology.

Rare earths are "an important strategic resource," the official Agency cited as saying.

The message was clear: China's role as the main global supplier of rare earths used in smartphones, lightweight magnets, batteries and other components is leverage over

And China's sway could extend much further into the US technology sector, particularly to and other companies that rely on Chinese

Until now, has tried to look restrained in its fight with over technology and trade. It has responded to US tariff hikes by imposing penalties, but usually on a smaller number of American imports.

As the two sides dig in for what may be a long fight, Xi's visit suggested his government is looking for new ways to pressure to settle. Investors are already fretting that will eventually try to limit, or even choke off, Apple's production and sales in That threat has triggered an $80 billion loss in shareholder wealth so far this month.

"There is rampant fear that has a target on its back, and is getting ready to fire," said.

While has an array of options for disrupting trade, they carry economic and political costs. And there is no guarantee they will work.

China's first retaliatory tariffs aimed to undermine Trump politically by targeting farm states that backed him in the 2016 election. Undeterred, Trump hiked duties on more Chinese imports. Then Beijing hit manufacturers, who lashed out. He pressed ahead.

If they want results, Chinese leaders might need to hit him where it hurts, by depressing U.S. stock prices, said Derek Scissors, a specialist at the in Washington.

It isn't clear how that can be done, Scissors said in an email, "but the is sensitive to extended market weakness." Apple's vulnerability to stock-price declines most likely has not gone unnoticed in Beijing.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 23 2019. 11:46 IST
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