Rare Earths,Personal Politics,and the U.S.-China Trade War: A Conversation with Adam Tooze
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The leaders of the United States and China, Donald Trump and Xi Jinping, recently appeared to set aside their trade war at a meeting in South Korea. While officials suggest this could be a strategic reset, many analysts believe tensions will persist.
What is the reality of the situation? Is China deliberately exploiting the world’s dependence on rare earths? How do Trump’s and Xi’s governments relate to each other? and who holds the advantage in the U.S.-China trade war?
these questions were explored in a recent conversation between Cameron Abadi and FP economics columnist Adam Tooze on the podcast Ones and Tooze. Here’s an excerpt,edited for length and clarity:
Cameron Abadi: Is China weaponizing dependence on its rare earths? In some sense,did China develop its controlling stake in rare-earth supplies to gain political leverage?
Adam Tooze: It’s clear they understood the strategic value. The puzzle is why others didn’t. This gives them a tactical weapon, and they’ve used it three times. The first instance was in 2010 during a dispute with Japan over the Senkaku island chain, when China rationed supplies after a chinese national was detained by Japanese authorities. Then again in 2019, after the Trump management increased trade pressure and Washington began discussing great power geopolitical competition, China again threatened to cut off rare-earth supplies. And now, it’s happened again.
While I wouldn’t say China only acts defensively, it’s best to view rare earths as a weapon they deploy when they feel backed into a corner – facing sanctions, protectionism, or discrimination they deem unacceptable. A key red line this time was a proposed U.S. tax on all Chinese vessels entering the United States. Beijing made it clear that proceeding with this would trigger escalation, and they followed through.
Generally, the Beijing regime views trade as strategic and geopolitical. They anticipate pushback from the United States and actively seek ways to counter it, both to pursue their interests and defend themselves against perceived American attacks.
CA: The United States and China have reached a deal, but is there friction between Trump’s personalist system of government and the more bureaucratic logic of Xi’s government?
AT: The video of their interaction is revealing. Trump appears genuinely pleased to be meeting, viewing it as a personal triumph. xi, though, delivers a statesman-like lecture, essentially lecturing a junior partner, acknowledging friction between the world’s two largest economies as inevitable.
Assessing the Outcome of US-China Talks: Is China Gaining an Advantage?
Recent meetings between US and Chinese officials, following up on President Biden and Xi Jinping’s November 2023 summit, have sparked debate over which nation emerged stronger. While the talks aimed to stabilize relations, a prevailing opinion in American media suggests China has gained the upper hand. This analysis delves into the arguments surrounding this assessment, examining the structural dynamics at play and the potential long-term implications of the current situation.
The Narrative of Chinese Strength
According to analysis following the meetings, many liberal American journalists view the outcome as a win for China, even expressing a degree of criticism towards President Trump’s negotiating tactics. This viewpoint centers on the idea that China has successfully navigated American pressure without making significant concessions on key issues. The core argument is that the US initiated a period of aggressive trade policies, and China is now responding strategically, rather than being dictated to.
US Trade Policy and unintended Consequences
A significant point raised is that previous US trade policies, particularly the imposition of high tariffs, may be backfiring. The US levied tariffs on a wide range of goods, including potential substitutes for Chinese products. Without maintaining sufficiently high tariffs,there’s a risk that production will simply relocate to China,undermining the original intent of the tariffs. This suggests the US is, in some ways, a victim of its own past strategies.
China’s Strategic Focus: Access to Advanced Technology
The talks also highlighted China’s desire to gain access to advanced technologies, specifically high-end semiconductors like those produced by Nvidia. nvidia is a leading designer of graphics processing units (GPUs) crucial for artificial intelligence and other advanced applications. China currently lacks domestic production capacity for these cutting-edge chips and is seeking to overcome this dependency. The US has imposed export controls on advanced chips to China,aiming to slow its technological advancement,but China continues to seek access through various channels.
Structural Dependencies and the Balance of Power
Despite China’s dependence on certain technologies, the analysis suggests that the structural balance of power hasn’t fundamentally shifted in America’s favor. While China is reacting to American “aggression,” it has maintained a relatively confident stance,offering limited concessions. China has signaled willingness to cooperate on issues like rare earth elements – critical minerals used in many technologies – but this is seen as a tactical move rather than a significant shift in the overall dynamic.
The assessment concludes that China is currently “ahead on points,” not achieving a decisive victory, but demonstrating resilience and strategic maneuvering in the face of US pressure.
Key Takeaways
* China is perceived to be gaining an advantage in US-china relations following recent talks, according to many American media outlets.
* US trade policies may be counterproductive, possibly leading to production relocating to China.
* Access to advanced technology, particularly semiconductors, is a key priority for China.
* The structural balance of power remains largely unchanged, with China demonstrating strategic confidence and limited concessions.
Looking ahead
The US-China relationship remains complex and fraught with challenges. While the current assessment suggests China is in a stronger position, the situation is fluid and subject to change. future developments will depend on a variety of factors, including the evolution of technology, shifts in global economic conditions, and the political priorities of both nations. Continued monitoring and analysis are crucial to understanding the long-term implications of this evolving dynamic.