Relations between the USA and China are once again tense. Experts say US President Donald Trump’s administration “doesn’t know exactly how to deal with China.”
The latest uptick came as Beijing expanded its restrictions on exports of rare earth metals on October 9, increasing the number of elements on the list.
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China has the largest reserves and most processing facilities for rare earth metals, which are used in a range of everyday and critical industries such as electric vehicles, smartphones, laptops and defense equipment.
First, it also required countries to license the export of rare earth magnets and certain semiconductor materials that contain even trace amounts of minerals that come from China or were made using Chinese technology.
China’s moves on rare earths also came after the U.S. expanded its Entity List, a trade restriction list that includes certain foreign individuals, organizations or governments, further restricting China’s access to the most advanced semiconductor chips and imposing levies on China-linked ships in an attempt to boost both the U.S. shipbuilding industry and China’s influence in the global one to relax shipping trade. China retaliated by imposing its own fees on vessels owned, operated, built or flying the US flag.
“For the U.S., its actions on chip exports and shipping fees were not related to the trade deal with China,” said Vina Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation of Canada.
Since then, the two countries have been in an “information war,” said Nadjibulla, accusing the other of taking the world hostage with its policies.
But beyond the rhetoric, the world sees that China is really on the rise.
“For the first time, China is carrying out this extraterrestrial action that also applies to other countries (with its tightened export restrictions on rare earths). They are ready to counter any US escalation and force the US to give in,” Nadjibulla said. “This is a very different type of trade war than we saw just three months ago.”
This was a “power play” by China ahead of a planned meeting later this month between Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation Summit in South Korea because “China has decided that the influence is on its side,” said Dexter Tiff Roberts, a non-resident senior fellow at the Atlantic Council Global China Hub, and pointed out that the meeting resumed after an initial uproar with Trump saying there was no reason to meet Xi any longer.
“If you look at the Trump administration’s approach right now, they are completely divided,” Roberts said.
Roberts referred not only to the multiple tariff threats that the US had made against both China and certain industries, and the waivers that were soon announced thereafter, but also in his statements at the Trump-Xi meeting, where Trump said that this was not the case, only to reverse it two days later.
“The Trump administration doesn’t really know how to deal with China,” Roberts said. “They don’t understand that China is willing to accept great pain,” and are not easily intimidated by US threats.
Beijing, on the other hand, has recognized that Trump is determined to get his big deal done with China and wants his state visit to seal it, perhaps because “he thinks it’s important for his credibility as a big deal-maker,” Roberts added, but that he can’t get there without giving more to China.
“China recognized in the run-up to the meeting that it could apply more pressure.”
Wei Liang, a professor at the Middlebury Institute of International Studies who specializes in international trade and Chinese economic foreign policy, agrees.
“Trump has a track record of TACO,” she said, referring to a term coined by a Financial Times columnist in May. The term stands for “Trump always goes out of his way” and refers to the announcement of tariffs, the subsequent development of exceptions and the postponement of implementation dates.
“He cares more about stock market reactions than any other US president and will therefore definitely be more flexible in making concessions. This is the inconsistency that has been recognized by his negotiating partners,” Liang said.
China’s defiant stance also comes at a time of its own political concerns, Liang added.
While the domestic economy is a “black box” and reliable data on growth, employment and other criteria are not available, China experts agree that the country has been affected by the tariffs, economic growth has slowed and unemployment has increased.
As China began its four-day fourth plenary session on Monday, in which the country plans to adopt the draft of its next five-year national economic and social development plan, Xi can use the moment to tell his domestic audience that the country’s problems are due to Trump’s policies and the whole world is suffering from these tariffs and that this has nothing to do with Chinese policies, Liang said.
A possible decoupling
All of this also signals that Beijing appears more willing than ever to “decouple” from the US, which represents a significant shift in mentality, as in the past the standard reaction to the idea was that it would be a “lose-lose” situation for both countries, Liang told Al Jazeera.
But in recent years, China has diversified its exports to other countries, particularly those under its Belt and Road Initiative, the ambitious infrastructure project it launched in 2013 to connect East Asia through Europe and which has since expanded to Africa, Oceania and Latin America.
Even when it comes to things it needs from the US – soybeans, aircraft and high-tech chip equipment – it can find other suppliers or has learned to work around those needs, as is the case with chip equipment, Liang pointed out.
Meanwhile, particularly in the years since the U.S.-China trade war began under Trump as president in his first term, China has introduced a number of national security laws — including its version of the U.S. Entity List, which it uses to place limits on those exports, Nadjibulla said.
“Everyone should have prepared the same way the Chinese did. We breathed a sigh of relief when there was a change of government (in the US after the first Trump administration), but China continued to prepare,” she said.
“This should be a wake-up call for all countries to find other sources to meet their needs. Everyone should redouble their efforts to diversify because we have now seen the Chinese playbook.”
