President Xi Jinping is playing a strategic game of chess in the area of international trade as China accelerates its rebalancing economic imperative. On November 1, Xi seriously stole the show at the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. He addressed important concerns in the region and beyond and reinforced the important place that China occupies in the global economy.
China’s rare-earth industry is critical to virtually every high-tech industry. Today, it remains a principal factor in exacerbating China’s trade dispute with the United States. Of course, this latest trip comes just as China suspended its ban on exports of gallium, germanium, and antimony to the U.S. Despite its aggressive militarization of the South China Sea, Beijing still hopes to maintain strong trade ties with Washington. Simultaneously, it seeks to gain from its control of the rare-earth materials.
China’s economy faces challenges. According to recent reporting, foreign direct investment in China has dropped by 51%. The country is still facing the fallout from a slowing, post-COVID economy. With factory-gate deflation easing in October amid signs of an industrial recovery, consumer prices are getting a small lift, keeping this a very mixed economic picture. Analysts are saying this is a positive sign that the economy, albeit weaker, continues to grow.
The current negotiations over rare-earth export controls have met with some snags. An earlier deal between the U.S. and China to relax restrictions foundered on the deal’s breadth. This move highlights the tightrope that both countries will need to walk as they seek to address thorny issues in their $600 billion commercial relationship.
Xi’s speech during the APEC summit highlighted China’s diverse range of industries, including manufacturing and technology, which continue to be vital to its economic growth. At the summit, Xi engaged primarily on these sectors. This decision bolstered China’s stake to a lead in the global market.
China is making a clever tactical move with its rare-earth export policies. This decision is a testament to its flexibility and commitment to responding to shifting economic realities and international urgencies. This suspension of the ban on key U.S. exports is a clear invitation to cooperate with the U.S. This action is particularly notable given the backdrop of ongoing trade tensions.