US still bans chips and many exports to China. Why should China relent on rare earth exports and others to the US?

Things are developing and Xi and Trump have spoken on the phone at long last, with Trump going to visit Xi in Beijing, although both sides have so far not confirmed it. Pending confirmation, we just take it for the time being.

One or two interesting questions will arise in the minds of those watching the developments. Who initiated the call - Trump or Xi? My guess is, it surely could not be Xi, as he holds all the cards. The fact that Trump has to go to Beijing tells us who really holds the upper hand. The second question is who is now kissing the arse of whom from the facts we are seeing, if true? Trump has no sense of shame, while Xi is too proud to bow. Think about that.

This visit by Trump to Beijing shows his desperation and the miscalculation about de-coupling and trying to punish China, orchestrated by the toddlers in his administration. Scott Bessant is at his wits end how to deal with China, trying to mask his desperation by still trying to put on a charade of being in a position of strength. We can see the man's fear on his face when talking about China.

How this meeting will turn out, even with Trump trying to soften Xi with his fake praising gesture, is not going to settle issues without serious concessions by the USA. There appears to be two very important things that Trump is trying to extract from China - supply of rare earth elements and resumption of shipments of Chinese products, which has practically stopped altogether in the face of the 30% tariffs. Some USA ports are at a standstill, with dock workers and truckers out of jobs. Then there is the looming shortage of goods on the shelves of retail outlets like Walmart and Target, not to talk about the effect on Amazon with the ending of the below US$800 tariff-free purchase and delivery.

China must not and never compromise its future with any relaxation of rare earth element export, thus opening a loophole and allowing the USA to stockpile and develop its military capabilities that will be detrimental to China in any event of conflict. This should be China's non-negotiable red line whatever happens during the meeting of the two leaders.

As for the resumption of shipments of Chinese products, that is also dependent on the reduction of the 30% tariffs, otherwise no point for Chinese manufacturers to talk of resuming the supply chain. If Chinese manufacturers have already found alternative markets over the last month or so, the problem is not going to be any easier to fix, knowing the habit of Trump being liable to change his mind. That unreliable behavior of Trump makes selling to the USA a difficult market for future development.

All in all, I would not expect much to be extracted from either side. Adults making deals with toddlers can never be a good thing that will last.


Anonymous