China arms itself for more export control battles

Digest opens free editor

Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

Analysts and businessmen say that China’s success in global supply chains in Snarling by regulating the rare land flow has managed to pressure Washington and clarifies Beijing’s strength in the weapon of controls on exporting on a wide range of basic commodities.

China dominates the main mineral supply chain and the Ministry of Commerce began requesting licenses for rare land exports and relevant magnets in early April. The process of slow approval rocked global supply chains and gave Beijing’s influence over the United States after a “liberation day” tariff in Donald Trump.

There is now hope that more licenses will be released after Trump and Chinese President Xi Jinping spoke on Thursday, which paves the way for a new round of commercial conversations in London on Monday. On Saturday, Beijing referred to the faster approvals process for some European companies.

However, the last publication of the export controls has turned the balance of force in the trade talks between the United States of China to Beijing, experts said.

Andrew Gilholm, head of China’s analysis of the risk of controlling consulting, said export controls helped the Xi administration not only on the United States, but the third countries under pressure from Washington to take a more difficult line in China.

“The simple truth is that we do not have much precedents for this. Export control tools are a dream tool for Beijing; they can modify, tighten, reduce and make it apply to all countries or one country,” said Gilholm.

The Chinese Foreign Ministry confirmed on Saturday the Deputy Prime Minister that he will travel to the United Kingdom for talks this week. Trump, Treasury Secretary Scott Bessen, Trade Minister Howard Lottenic, and American Trade Representative Jameson Jarir in the first round of negotiations since hitting the 90 -day commercial truce on May 12.

Analysts said that the risk to the United States and the European Union-both of which are closed in commercial wars with China-is that the financial lever discovered by Beijing with rare land export controls can be repeated in other regions of the high-tech supply chain.

If Beijing wants to respond to future escalation, such as further tightening chips controls by the United States, it can restrict material flows such as titanium, magnesium and rare light land that has been excluded so far from the new licensing system, according to an analysis of Trivium, which is a consultation in Beijing, Beijing,,

China also dominates the production of new powerful magnets, the most powerful transistors, dense batteries, cheaper, chips and new software, said Arthur Krohper, head of research in a memorandum of customers. He also referred to a “huge ecosystem for intertwined industries” via electric and independent vehicles, drones, robots, sensors, smartphones, “semiconductors, batteries and AI that work with them.”

“The financial leverage balance quickly turns in favor of China, which is the fact that the Trump team has barely confessed,” he added.

According to a flash survey conducted by the American Chamber of Commerce in China, the Lobby Group, in late May, is more than three quarters of companies affected by rare ground controls, had only three months of stocks, while highlighting the extent of the nearby -to -sake of many factories to close them.

The European Chamber said in recent days that there is an increase in the number of export approvals, which are the most urgent, to “avoid a major crisis.” But the bloc companies were struggling with the licensing process, whether in terms of delay or lack of transparency.

One of the businessmen said it was unclear whether Beijing was aiming to target Europe, but as soon as the shortage became clear, he could take off the accumulated actions.

The slow approval of export licenses has already led to a series of urgent bilateral negotiations in Beijing, giving China more regions in the areas of disagreement. In recent weeks, the rare land has been raised directly in Beijing by South Korea, Japan and some member states of the European Union, according to the people familiar with the matter.

One of the Western diplomats familiar with the negotiations said, “China’s approach is” purely transactions. ”

Beijing has argued that its use of export controls is in line with the international practice of products that can be used in both military and civil requests. The United States has also imposed restrictions on semiconductor sales and chips -making equipment to China, restrictions aimed at slowing the technological rise in the country.

The Ministry of Trade did not immediately answer the questions on Saturday.

The threat to cut it off from the Earth and the rare Chinese magnets is to enhance the determination to reduce dependence on the industrial supply chain in China.

Eilara Mazuku, an industrial policy expert with the Center for Strategic and International Studies, a research tank in Washington, expects that governments will also start building larger resources to bear such shocks and to provide more funding to develop alternatives.

Tom Nonst, assistant director in Shanghai in Trevium, said that the current export controls have proven to be “very effective” and could continue, given that countries cannot simply “open mines and prepare improvements overnight.”

“China first needs to know how to use the great firepower it already possesses.”