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Investing.com-- China is preparing measures to ease the flow of rare earths and other critical materials to the U.S. military, the Wall Street Journal reported on Tuesday, citing people familiar with the plan.
China plans to establish a “validated end-user” system to exclude companies with ties to the U.S. military from receiving its rare earths, while fast-tracking shipments to other, civilian firms, the WSJ reported.
The VEU system will allow China to follow through on President Xi Jinping’s recent pledge to U.S. President Donald Trump to resume the flow of rare earths to the world’s largest economy.
Such a system could make importing Chinese materials even tougher for U.S. companies with civilian and defense clients.
Rare earths are used in a variety of applications, from consumer electronics to defense equipment. China is the world’s largest supplier of the materials, and has used its dominance as a major bargaining chip in its renewed trade conflict with the United States.
Washington was seen seeking alternative rare earth supply chains in response, having recently signed a supply deal with Australia.
Australian firm Lynas Rare Earths Ltd (ASX:LYC) is the largest rare earths producer outside China.