The Age of Economic Terrorism has arrived
With the POTUS pressuring Huawei without clear evidence of wrong-doing, America is putting China in a corner that’s contrary to the long-term plans of Beijing.
Rare earth minerals are commonly used in high-tech devices, automotives, clean energy and defense. About 35% of global reserves are in China, the most in the world, and the country is a mining machine, producing 70% of total rare earths in 2018. This means China may have more leverage than America admits in the trade war.
- U.S. consumption of rare earth compounds and metals relies heavily on imports, which rose to $160 million in 2018. Eighty percent were from China. The entire American tech sector relies on these rare metals.
The trade war continued to escalate this week with no clear exit for China and the U.S. While Huawei is even slowing down or stopping smartphone manufacturing to assess its situation, Beijing is also planning to counter the move by America.
While America claims China uses back-doors in Huawei equipment to spy and infiltrate and steal the intellectual property of U.S. companies, both countries are evolving into surveillance states. America now even requires by law social media accounts from visa applicants (BBC).
Tariffs Have Not Made America Great Against So Far
China’s threat to curb exports of rare earth minerals is an interesting tactic. China has made its trade war demands ahead of the G20 summit. And so far, if you ask the stock market, tariffs have not ‘made America great again’. It was the worst May on record on Wall Street since 2011.
The U.S. has created a world where the algorithm is their boss in the gig-economy with Uber drivers and a Facebook family of apps that isn’t trustworthy but appears even more defensive against Chinese tech rivals. Huawei is the first scapegoat. I wonder who is next?
Tech Cold War Could Drive us Into a Recession
China’s authorities have released statements and a list of things they consider more balanced and fair. They are charging America with “economic terrorism” and unfair requests. If Foxconn has halted or slowed productionlines of Huawei smartphones, a Chinese retaliation is coming.
Trump is blaming China, and China is of course blaming America for the current stalemate in trade talks. China has bigger plans however in technology in a much more organized way than does America. There’s no doubt America backtracked on its previous consensus not to raise tariffs, and to work towards cancelling them. China being upset makes a lot of sense.
Trump may be pushing the world into a technological cold war dark age, he just doesn’t know it yet. This is because China as a wounded dragon is a much more dangerous long-term “strategic rival” than America’s leadership can handle in the future, as they continue to lose economic and technological superiority to the Chinese.
Beijing’s white paper came just a day after it introduced new tariffs on goods imported from the US. Meanwhile the stock market in the U.S. doesn’t like this tense and uncertain atmosphere as the Dow has basically had its worst 3-week period since 2011. Several U.S. media outlets have reported that Beijing backed out from basically all negotiating points during talks with the United States several weeks ago. You cannot trust the News it seems, as propaganda and Trump confuse things like objective facts.
The bottom line is America can never be great again because China will be greater. Capitalism and democracy both suffer from significant malaise and corruption (wealth inequality). Tech firms are getting too powerful without regulation, and a Chinese tech dynasty is coming that will make Silicon Valley look more than a bit incompetent.
The United States cannot use pressure to force a trade deal on China, because China is ambitious, more ambitious as a state than any “American Dream” is for an individual or family in America. China’s end game isn’t just trade but world domination. Escalations in cybersecurity, social credit systems and surveillance capitalism will all happen because of China becoming more powerful. A few tariffs in the short term is not going to change the future.
All Rights Reserved for Michael K. Spencer