Article originally in the Financial Times. Other articles .
Alan Beattie is the chief reporter of the Financial Times for Trade.
In the cult film Princess bride The hero Westley in a duel of witness will force the villain Vizini to kill himself. Vizzini has to choose between two glasses of wine, one of which is poisoned according to Westley. In fact, the Westley Cup is also annoyed, but he will survive: He has built immunity to toxin for years. Thanks to his long and careful preparation, Westley won the duel long before it started.
Replace Westley Si Jin-Pching and Vizini Donald Trump and commercial negotiations between America and China this week in London will make much sense. They did not end up so that the United States was dead on Earth, but they were not far away.
The parties agreed on a ridiculous vague framework of cooperation and the United States asked for a hand to seal the agreement. This is the activity in which Donald Trump, as is the case, is legendary bad. It is not even good in negotiations. Beijing is a clear winner of these first struggles.
Got only an indefinite promise
Trump has already canceled most of the extremely repressive duties he has imposed on China since his inauguration. This time, he received only an indefinite promise from China that he would cancel the restrictions on the export of precious earths, which she introduced on April 4, as Trump’s chief economic advisor Kevin Hassett.
As I recently wrote, China’s April decision to limit the export of some metals of rare earths is a much more precise intervention than previous non -systematic restrictions. Restrictions from the beginning of 2010 weakened the expansion of mineral production outside China and that they were smuggled by miners and producers who are notoriously violating the law.
The latest round of restrictions focuses on less common “heavy” elements of rare earths, such as a dysprosium that has no major competing producers outside China, and whose price has risen sharply after the announcement. Since last decade, Beijing has been hard to suppress unauthorized production and smuggling of rare soils.
Production is controlled by a small number of strictly controlled companies, and the latest controls are introduced through export licenses for ‘dual use’ products used in defense production. This greatly facilitates the control of the supply chain.
China overcomes a low American bar
The Chinese state certainly has its own problems with judgment and coordination. His checks of rare earths are threatened by the economies that Beijing is trying to pull the United States orbit. European car manufacturers complained loudly.
Annoyance to all customers of rare earths is politically risky, but China at least a little distinguishes between European and American companies. Volkswagen suppliers, who have more than 30 plants in China, were among the first to be licensed to buy rare soils. Beijing is competent to overcome the low bar, set by Trump’s government.
Although US economic weapons are menacing, it is harder to focus exactly. Just as the United Kingdom was mistakenly convinced that his EU’s commercial deficit would give him a superpowe Brexitic weapon in the form of access to the British consumer, Trump thought that too high duties for Chinese imports would force Beijing to obey.
There is no doubt that China is vulnerable, as it is still dependent on foreign demand, because it holds its traditional export -oriented growth model. However, Trump’s non -targeted duties meant that US companies risked the loss of key industrial inputs as well as potentially emptying racks with consumer goods.
America needs more accurate ammunition
Regarding our own US attempts to use the export control to brake the Chinese economy, it has been shown that these tools are too easily bypassed. Joea Biden’s government has used restrictions on US technologies and foreign investments to slow China’s technological development in semiconductors and other sectors, and relied on the Allies to do the same.
In fact, it didn’t work. China quickly developed its own chip technology. Similarly, the recent Trump’s limits of the export of chips for chips will allow the United States to recover the positions that China has deprived of them.
Trump’s attempt to fight on the Chinese playground to control critical physical inputs by limiting the export of gas exports used in the chemical industry, rather damaging society from America IZ its allies. The United States still has several extremely strong weapons, such as limiting access to the global dollar payment system, but their use on a large scale is not tested.
The triumph of the calmly calculating Westley above the Ignorant Vizzini is a really big film moment. If Trump wants to win another round, he will have to evaluate the ammo that it has and deploy it much more precisely. History does not indicate that this is likely to be a result.
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