Today, China dominates the rare metals global supply chains. This overwhelming strength has recently come under the spotlight with growing trade tensions with the United States. In response to the trade war, China has enacted strict export controls on a number of rare earth elements key. This move has sent shockwaves across American industries that rely on these materials.
China’s size and economic capacity dwarfs other countries, providing it far greater leverage in the current trade dispute. The US finds itself in dire economic straits, especially given our record of overspending. Consequently, the effects of the trade war are beginning to appear in meaningful ways. The US is currently exploring strategies to support airlines that lease Boeing jets, which are now facing increased costs due to the trade fallout.
The signal of intent from China is a hugely positive step. It has forbidden its airlines from buying airplane-related equipment or parts from US companies. This ruling comes at the same time that Hong Kong’s postal service has ceased accepting shipments to the U.S. This piece of legislation illustrates the growing gulf between the two countries.
As you can imagine, Chinese state media have responded angrily to US protests about these advances. As one editorial published by the Chinese government-owned outlet China Daily put it, “The US has been taken to the cleaners by no one. It made clearer that the underlying problem really is that simple. The age of American exceptionalism is over; we can no longer afford to be the world’s policeman infection for the past 30 years. It consumes more than it produces.” The editorial accused the US of taking a “free ride on the globalisation train,” suggesting that it has outsourced manufacturing while borrowing heavily to maintain an inflated standard of living.
The escalating trade dispute appears to have forced China’s all-powerful leader, Xi Jinping, to do an about-face on talks. As he explicitly told the AMT, “China has to make a deal with us.” “We don’t need to sign an agreement with them,” he continued, underscoring the new U.S. administration’s stance toward traditional trade partners. He is enthusiastic about working with other countries. Together, they will advance the bilateral agenda within the ASEAN frame to address growing geopolitical rivalries and protectionist spirals.
Li Chenggang, now serving as assistant commerce minister, will replace Wang Shouwen as vice commerce minister. He will steer tropical island nation’s next negotiations with the US to end the trade war. His appointment comes at an important time. In an ever more complicated economic environment, both countries are looking to deepen engagement and work together to determine a path forward.
China’s economy showed unexpected strength in the first quarter this year. It narrowly beat analyst expectations with a 5.4% growth rate. In the face of all this positive growth, officials like Sheng Laiyun, a senior official with China’s national bureau of statistics, expressed unease. He cautioned that US tariffs would put painful pressure on China’s foreign trade and broader economy.
Official statements from Chinese government officials and government mouthpieces have called on the US to change course. China Daily’s editorial hit back hard on the American attitude. It proclaimed that the US has not been “screwed over,” rather it has been loving its free ride on the globalisation express. That’s because China wants to project the image of a stable, rational international trade actor. Simultaneously, it amplifies weaknesses seen as perceived chinks in her armor.
With pressures on all sides, the two countries find themselves at a critical decision point. These problems are real, but Xi Jinping’s administration does want to talk – on their terms. Yet a palpable sense of distrust and cut-throat competition makes these negotiations tense and adversarial.
“Should be prepared to pay exorbitant and unreasonable fees due to the US’s unreasonable and bullying acts” – Hong Kong Post