Hans van Leeuwen
The world’s investors, executives, policymakers and politicians all now keep an eye on the Truth Social account @realDonaldTrump. The president’s posts have the power to move markets and even shake up the world order.
Now there’s another habit they might need to cultivate: watching the announcements from China’s ministry of commerce.
The ministry’s initially low-key announcement last week of new regulations on Chinese rare earth exports has sent shock waves through the West.
Beijing awarded itself the power to dictate what many companies, based anywhere in the world, do with key products that contain rare earths or battery materials sourced from China. The sweeping powers affect everything from cars to solar panels and missiles. And almost all companies affected have nowhere else to go.
“This is a completely new dawn. This no longer has anything to do with trade. We’ve morphed from a trade war into a grey-zone operation,” says James Kynge, a China watcher at think tank Chatham House.
“It’s a complete step change in China’s leverage and China’s ability to coerce not only the US, but every other country in the West, if it chooses to do so. The evidence of the past suggests that Beijing may well use this leverage. And then we’re into a whole different world.”
For years, Beijing has been building up an arsenal of economic weaponry. Chinese goods could be either withheld from a country or dumped on it. Exports to China could be blocked. The world’s largest creditor could toy with an indebted government’s bond market, or call in its loans.
From time to time, it has turned this coercive firepower on countries that it views as transgressive. Countries including Japan, Norway, Lithuania and Australia have already been put through the vice.
Now, it is showing the world just how far it is prepared to go.
The new rare earth powers have been announced amid claims that Britain dropped a trial against two alleged Chinese spies because of its dependence on Beijing for cash.
