Chinese rare earth miners gained support on Wednesday on speculation that Beijing may cut output in retaliation to the US intensifying the trade dispute.

China Rare Earth Holdings Ltd, a Hong Kong-listed rare earth supplier, saw its shares rise 41% to 72 HK cents (9.2 US cents) on Wednesday morning. The shares eased to close at 62 HK cents, still up 24% from Tuesday.

The shares have gained support over the past two weeks, especially after President Xi Jinping’s visit to south Jiangxi on May 20, as investors speculated that rare earth prices would grow if China started cutting the supply. They hit 87 HK cents on May 21, 200% up from the usual level of 29 HK cents.

Shanxi Guanlu Co, Ltd, a Shenzhen-listed rare earth miner, also surged 10% to close at 17.38 yuan (US$2.51). Shenghe Resources Holding, listed in Shanghai, increased 5% to 12.05 yuan. 

The Hang Seng Index fell 155 points, or 0.57%, to 27,235 on Wednesday. The Shanghai Composite Index rose 5 points, or 0.17%, to 2,915.

On Wednesday, some of China’s state media insinuated a possible halt to China’s rare earth exports to the United States as retaliation in the trade war, echoing the latest statement by the influential National Development and Reform Commission (NDRC).

“The industry chains of China and the US are highly integrated and complementary to each other … there will be no winner in a trade war,” an unnamed NDRC official told CCTV on Tuesday evening. “You [the reporter] asked whether rare earth will become a weapon to retaliate against the US’s unreasonable suppression on China.

“I can tell you if any people try to use their high-tech products made with our rare earth to suppress China’s growth, the people of south Jiangxi (where rare earth is mined) and China will not be happy.”

As the largest rare earth supplier in the world, China has pushed for the development of the rare earth industry and is happy to see these minerals used in different kinds of high technology products, said the official, adding that the US should stop using its high-tech products as bargaining chips in the trade war as they are made with China’s rare earth minerals.

On Wednesday morning, the Xinhua news agency published a commentary written by “An Bei,” which used stronger words about a possible rare earth supply cut to the US. The commentary’s headline said: “Don’t dare to think of using products made with rare earth to suppress China’s growth!”

“Some US politicians tried every method to hurt Chinese high technology firms and stop China’s growth,” the commentary said. “Even they can ignore the fact that the industry chains of China and the US are highly integrated, they can’t change the reality that all industry chains in the world are working closely together.

“There is no winner in a trade war. China doesn’t want to fight, but it won’t be afraid of it and will fight if it must,” An Bei wrote.

On Thursday, the People’s Daily published a commentary written by “Wu Yue He,” calling on the US to stop using its high technology products as weapons in the trade war.

“Will rare earth be used as a weapon to retaliate against the US ban? The answer is simple … The US overestimated its ability to manipulate the world’s supply chain and immerse itself in pleasure. The US will regret when it wakes up,” the commentary said.

The commentary added “we advise the US not to underestimate China’s ability to protect its rights to develop itself. Don’t say we didn’t give a warning.”

“Based on what I know, China is seriously considering restricting rare earth exports to the US. China may also take other counter-measures in the future,” Hu Xijin, editor-in-chief of Global Times, wrote on his Twitter account.

On May 10, US President Donald Trump increased tariffs on US$200 billion worth of Chinese products to 25% from 10%. On May 13, China’s Finance Ministry said the world’s second-largest economy would raise tariffs on US imports worth $60 billion next month.

On May 15, the US Department of Commerce added Huawei Technologies to its Entity List on national security, banning the Shenzhen-based company from using US chips and software. It later granted a temporary license to Huawei to purchase US goods by August 19.

On May 20, Chinese President Xi visited some rare earth mining and processing facilities in south Jiangxi province. The visit was seen as a signal that Beijing may consider halting rare earth supplies to the US as retaliation.

According to a research report by the Bank of America Merrill Lynch, China has 36% of the world’s rare earth reserves but 90% of the minerals’ global production. Rare earth minerals can also be found in Afghanistan, Brazil, Russia, the US, India and Australia.

See related story: If China cuts rare earth supplies, what can the US do?

Read: China could play rare earths card in US clash