Mining of rare earths in China. File photo: VCG

China's rare-earth export slump in May reflects the country's policy tone to control rare-earth supplies, one expert said on Monday. He predicted that the slump might accelerate in the next few months as China considers launching measures to cut rare-earth exports to the US amid the trade war. 

China's rare-earth exports slumped by 16 percent on a monthly basis to about 3,640 tons in May, according to customs data released on Monday. On a yearly basis, the export volume slumped by 7.2 percent in the first five months of this year. 

The decline comes at a time when China has indicated a probable cut-off of rare-earth exports to the US as a countermeasure to US tariff increases and sanctions against certain Chinese companies in the ongoing trade war. 

In recent meetings convened by the National Development and Reform Commission, some domestic rare-earth companies suggested that China should strengthen management of rare-earth exports. 

Wu Chenhui, an independent rare-earth analyst, told the Global Times on Monday that the rare-earth export decline in May has more to do with the country's drive to control rare-earth supplies to crack down on illegal rare-earth extraction than with the China-US trade war. 

"A fluctuation of less than 20 percent is still within the normal range," he said. 

Li Chunding, a professor at the College of Economics and Management under the China Agricultural University, also said that although China has shown an inclination to cut rare-earth exports to the US, it will take another few months for the trade data to reflect such moves. 

"The rare-earth export decline shows that China is speeding up moves to manage rare-earth exports, as the government wants to change the situation of excessive exports at low prices," Li told the Global Times on Monday. 

But the experts predicted that the influence from the trade war might show up in trade data in the next few months, with rare-earth exports likely to plunge further and faster as China might dramatically reduce or even halt rare-earth exports to the US as a countermeasure to US tariff increases if the trade war intensifies further. 

"It should be a severe blow to the US as some of the heavy rare earths the US needs are almost solely produced in Ganzhou in East China's Jiangxi Province," Wu said. 

Overall, China's exports to the US slumped by 3.2 percent year-on-year to 1.09 trillion yuan ($157.6 billion), while imports from the US fell 25.7 percent to 335. 3 billion yuan in the first five months of this year.

China's trade surplus with the US widened by 11.9 percent in the first five months in 2019, according to the customs data. 

Li said that the economic structure of the US, with Americans preferring consumption to saving, means that external policy intervention is very hard to alter the US trade deficit with China and many other countries. 

China's yuan-denominated exports rose 6.1 percent on a yearly basis, while imports rose by 1.8 percent in the first five months of 2019.