Days after the U.S. forced the closure of a Chinese consulate, China just ordered the closure of a U.S. consulate in Chengdu.
Unfortunately, this won’t be the end of the chaos. We’ll see plenty more.
If China really wanted to stick it to the U.S., they’d cut off rare earth supply, which would be another sizable mess. After all, the world uses rare earth metals in just about everything.
At the moment, China accounts for more than 95% of the world’s production of rare earth, which puts it in a powerful position. In fact, according to Reuters, “China is the world’s dominant producer of rare earths, a group of 17 minerals used in everything from consumer electronics to military equipment.”
“Pulling rare earth elements from the ground is one thing. But creating a whole supply chain – from processing to being used for advanced technology – is another. There isn’t the infrastructure or the funding. Until then, the U.S. has to rely on China, which could leave it in a vulnerable position if relations between the two countries deteriorates further,” says NPR.
If rare earths are cut off, investors should pay close attention to related ETFs like the VanEck Vectors Rare Earth / Strategic Metals ETF (REMX).
