US President Donald Trump (left) and Chinese President Xi Jinping. AP = Yonhap News
The recently reignited trade war between the U.S. and China appears to be developing into a long-term war as China maintains a hard-line response. As China strengthened rare earth export controls in response to the threat of high tariffs from the United States, U.S. President Donald Trump responded by declaring “100% additional tariffs.” In response, the Chinese Ministry of Commerce countered, saying, “The United States is making excessive threats with double standards,” and “we will fight until the end.”
The Wall Street Journal (WSJ) believed that behind China’s hard-line response was ‘targeting the U.S. stock market.’ WSJ reported on the 14th (local time), “China has found America’s Achilles heel,” and “President Xi Jinping is convinced that the U.S. economy cannot withstand a long-term trade conflict.” The weakness that China is targeting is President Trump’s ‘obsession with the stock market.’ Until now, President Trump has used stock prices as his economic report card. Even if he made strong statements, he seemed to immediately ease them when the market faltered. In fact, when the trade conflict led to a stock market crash last April, the United States declared a ceasefire a month later and later signed a TikTok agreement with China. Rush Dorsey, assistant professor of security studies at Georgetown University‘s Graduate School of Foreign Service, told WSJ, “China expected that Trump would eventually give in due to market instability.”
Attendees raise their hands to vote at the closing ceremony of the 3rd plenary session of the 20th Central Committee of the Communist Party of China, held at the Great Hall of the People in Beijing on July 18 last year. CC-TV Capture
Some interpret China’s hard-line stance as a ploy to test divisions within the United States and at the same time save President Xi’s political face. Wu Xinbo, director of the Center for American Studies at Fudan University in Shanghai, told the New York Times (NYT), “When the United States expanded sanctions 10 days after the phone call with Trump, Xi Jinping had no choice but to respond strongly ahead of the Communist Party leadership meeting.” President Xi will present a blueprint for economic and social development for the next 10 years at the 4th plenary session of the 20th Central Committee of the Communist Party of China, which will be held from the 20th to the 23rd.
Chinese scholars believe that this conflict will actually serve as an opportunity to strengthen internal solidarity. Yang Jianwen, a researcher at the Shanghai Academy of Social Sciences, told the South China Morning Post (SCMP), “External pressure can act as motivation,” and “technological independence and strengthening security will accelerate.” Wang Dan, director of China at Eurasia Group, also said, “This incident will further emphasize the stable strategic stance of not giving in to pressure from the United States at the 4th plenary session.”
Hede Shipping of Hebei Port Group, a Chinese state-owned enterprise, was spotted loading containers at the Los Angeles Port in Los Angeles, California on the 13th (local time). AFP = Yonhap News
However, foreign media were concerned that this conflict could develop into a long-term war. The economist warned, “The two countries are in a state of ‘mutually assured disruption’ where each other is taking advantage of each other’s weaknesses,” and added, “There is a high possibility that tensions will prolong.” The NYT expressed, “A dangerous game of chicken surrounding the two major strategic assets, rare earths and semiconductors, has begun.”
Now attention is turning to the Asia-Pacific Economic Cooperation (APEC) summit to be held in Korea at the end of this month. As both leaders are likely to attend, the key is whether the bilateral meeting will take place. “This meeting will send an important message,” said Ryan Haas, director of the China Center at the Brookings Institution. “Xi Jinping will emphasize greater stability and predictability, but Trump may try to extend a temporary ceasefire conditional on guaranteeing rare earth supplies or limiting tariffs.”
