Despite last night's disappointing PMI print, the latest sign that the trade-war backlash is hurting the mainland economy (especially since the credit injections from earlier this year are fading into the distance), Beijing is apparently undeterred, and on Friday, it continued to ratchet up threats about invoking the "nuclear option" of curbing exports of rare earth metals to the US, a move that would cause significant disruptions to supply chains for everything from microchips to to fighter jets.

Beijing has reportedly prepared a plan to cut off exports of rare earths to the US, Bloomberg reports, though it didn't offer any details about what this plan might entail.

Beijing has readied a plan to restrict exports of rare earths to the U.S. if needed, as both sides in the trade war dig in for a protracted dispute, according to people familiar with the matter. The government has prepared the steps it will take to use its stranglehold on the critical minerals in a targeted way to hurt the U.S. economy, the people said. The measures would likely focus on heavy rare earths, a sub-group of the materials where the U.S. is particularly reliant on China. The plan can be implemented as soon as the government decides to go ahead, they said, without giving further details.

China produces 80% of the world's rare earth metals - which, contrary to what their name might suggest, are actually more plentiful than precious metals like gold.

However, most rare earths imported by the US travel through intermediaries before arriving at US ports. Washington exempted the critical metals, which are used in a broad range of high-tech products, from tariffs.

One analyst cautioned that nothing is yet set in stone.

"Currently, it’s still just a possibility that China may ban or do some kind of restrictions," Racket Hu, a researcher at Shanghai Metals Market, said in a Bloomberg TV interview. "But if it does happen, then we believe prices of rare earths will surge," he said, citing what happened in 2010 when China curbed shipments to Japan.

Indeed, it appears traders are already starting to price in the export curbs, as the VanEck Vectors Rare Earth ETF has risen off its 2019 lows since Trump's Huawei blacklisting elicited threats of retaliation from Beijing.

Though miners, including Australia's Lynas, are scrambling to open new mines...

...the new capacity likely won't be ready in time to prevent significant supply disruptions should Beijing make good on its threats.