Greer, Bessent blast China’s rare earths curbs, urge Beijing not to implement them

WASHINGTON - Top US officials on Oct 15 blasted China's major expansion of rare earth export controls as a threat to global supply chains, but said Beijing could still change course and avoid steps by Washington to decouple from the world's second-largest economy.

US Trade Representative Jamieson Greer told a press conference that China's new export restrictions were a "global supply-chain power grab" and the US and its allies would not accept the restrictions, but that he and Treasury Secretary Scott Bessent stressed that Washington did not want to escalate the conflict, which has roiled financial markets and sent US-China relations into a tailspin.

As at the night of Oct 14, US President Donald Trump was still expecting to meet Chinese President Xi Jinping
in South Korea later in October, Mr Bessent said.

Mr Greer told reporters that China has not yet implemented the revised regulatory system for rare earths and could still back away, just as the US had not implemented a retaliatory 100 per cent increase in tariffs on Chinese imports.

"These are drafted, or in draft, so it's quite real, but our expectation is that they won't implement this and that we'll be able to be back to where we were a week ago where we had the tariff levels we've agreed to and we have the flow of rare earths that we agreed to," Mr Greer said.

Neither official would discuss possible outcomes for negotiations aimed at averting the restrictions and US retaliation, which includes a threat by Mr Trump to increase tariffs on Chinese imports by an additional 100 per cent.

The two sides have maintained lower tariffs and continued Chinese rare earth flows under a delicate, six-month truce that has been repeatedly extended for 90 days at a time but Mr Bessent suggested a longer extension was possible.

"We are currently in a 90-day roll on the tariffs, so is it possible that we could go for a longer roll in return for a delay? Perhaps, but all that's going to be negotiated in the coming weeks before the leaders meet in Korea," he said.

Trade war clouds outlook

Their comments came hours after the US and China rolled out tit-for-tat port fees on each other's ships, opening a new front in their bitter trade fight.

Escalation of US-China trade tensions overshadowed the International Monetary Fund (IMF) and World Bank meetings in Washington. In its World Economic Outlook released on Oct 14, the IMF had upgraded its global growth forecast,
in part due to the superpowers' recent detente.

Mr Bessent said US and Chinese officials were meeting on the sidelines of the IMF-World Bank gathering to arrange the Trump-Xi meeting, adding that it was the level of trust between the two leaders that had prevented an escalation of the tariffs in the past.

Mr Greer and Mr Bessent, who have personally met senior Chinese officials four times in four different European cities in recent months, called China's actions, which threaten to upend global supply chains, a "clear repudiation" of prior US-China agreements.

Unreliable supplier?

The US does not want to economically decouple from China, but would have to take action if Beijing proved to be an unreliable supplier, Mr Bessent said, noting that Chinese officials recently told US auto companies that a slowdown in shipments of rare earth magnets was "probably something" to do with a holiday.

"Not only is China fuelling Russia's war (in Ukraine), but China's actions have once again demonstrated the risk of being dependent on them, on rare earths and for that matter, anything," Mr Bessent said, adding: "If China wants to be an unreliable partner to the world, then the world will have to decouple."

He said Washington had further measures it could deploy, including export controls, if Beijing proceeded, and was also ready to tariff China over its purchases of Russian oil, as long as European partners joined in. The US has slapped additional tariffs on India over its smaller purchases of Russian oil, but has refrained for now from taking action against China.

Members of the Group of Seven advanced economies are expected to discuss the issue during a meeting later on Oct 15 on the sidelines of the IMF-World Bank meetings.

"While there are substantial actions we can take, we'd rather not. I believe China's open to discussion and I am optimistic that this can be de-escalated," Mr Bessent said.

The US would also produce photographs supplied by the Ukrainian government that showed Chinese parts were used in Russian drones operating in Ukraine, he added through a spokesperson.

Earlier on Oct 15, the Treasury Secretary told a CNBC event that China had clearly intended to take action "all along”, rejecting Beijing's claim that the actions were a response to US actions, including the new US port fees.

He told CNBC that a senior Chinese trade official had threatened as early as August to "unleash chaos on the global system" if the US went ahead with the port fee increases.

Mr Bessent named the official as Mr Li Chenggang, China's chief trade negotiator and a subordinate of Vice-Premier He Lifeng, who has participated in all the US-China talks. REUTERS