Beijing response in trade war with the United States

[NickSmith]

As it is known, the tension in trade relations between the United States and China in May 2019 reached a new level. Raising tariffs on Chinese goods and the actual ousting of «Huawei» from the US market was a powerful blow to the basis on which modern China developed. Restrictions or a total ban on the supply of rare earth elements to the United States may be one of the responses from the Chinese side. It should be noted that China is a monopolist in the export of rare earth elements today.

Beijing, threatening to open a new front in a trade war with the United States, believes that these measures will give China a powerful means to repel American aggression. However, the opening of a new front and the cessation of the supply of rare earth elements in the United States threatens China’s monopolism and may undermine its credibility as a partner.

A sharp impetus to the demand for rare-earth elements was given by the development of «green» energy and electric vehicles. For example, «Toyota» annually produces more than 1 million of «Prius» cars, each of which contains 4 kg of rare-earth elements (2.5 kg of lanthanum in the battery and 1.5 kg of neodymium in the motor). Each «iPhone» uses a quarter of a gram of rare earth elements. Moreover, these rare-earth elements are used in every type of modern US weapons, for example, for the production of a «Virginia» class submarine, more than 4 tons are needed, for an F-35, about 417 kg.

 

Thus, according to analysts, the cessation of supply of rare earth elements to the USA will indeed be a significant blow to the government of President D. Trump, who actually started these trade wars.

 

Also, in the disagreements between the United States and China, there is no benefit for the Japanese, who have long-standing territorial disputes with Beijing over the ownership of the Senkaku archipelago (Diaoyu). Despite the Security Treaty, under which the United States pledges to protect Japan from third-party threats, Washington may remain indifferent to the territorial issue, because if Washington does not have the resources for its industrial activities, the Americans will not have an incentive to help their Japanese counterparts continue to maintain neutrality, giving China the opportunity to dominate the archipelago. And the Japanese government, of course, because of its weak character, will not take bold measures against Washington, in fear of losing its favour.