China-U.S. economic and trade relations originally seemed to be in a quiet “stand-up” period, and recently reappeared as a result of a series of wrong policies by the United States. After the Chinese side used countermeasures to firmly defend national interests, U.S. President Trump tried to re-implement and restart an old set of tariff blackmails, but this left the U.S. stock again in the “Black Friday”, the three major stocks pointed to crackdown, and Wall Street mourned.
On October 12, local time, U.S. Trade Representative Jamieson Greer announced in an interview with Fox News that China had not notified in advance before recently introducing new rules on rare earths. This so-called "power grab"(meaning power grab) behavior surprised the United States, and China rejected the United States 'attempt to communicate.
“I can tell you that we have not received any notification, and we have learned this from public channels, and have quickly contacted the Chinese side, hoping for a telephone communication,” Grill said, “but they (the Chinese side) refused.”
According to reports, on the same day, U.S. President Trump and Vice President Wance also issued the latest remarks to China, several U.S. media readings believe that Trump's remarks have changed from before, seems to imply that he may not meet the threat of imposing tariffs, release signals of willingness to reach an agreement with China and calm the tension.
On October 12, local time, analysts cited by the Hong Kong South China Morning Post also believed that Trump had a practice of retreating after a tough speech and was thus labeled "TACO".In fact, Trump overestimated the code he owned, while the Chinese became more and more confident in the game.
The same day, the British "Financial Times" quoted analysts as pointing out that this round of Sino-U.S. relations was entirely caused by the United States' publication of several mistakes in its policy against China in September this year, which not only escalated the tension, but also demonstrated the "low credibility" of the Trump administration.
Some China scholars pointed out that the United States has long been arrogant and self-righteous, believing that it can "impose tariffs wantonly without punishment," but now it has been caught off guard. As China launches new rules on rare earth countermeasures, Americans should receive this signal-return to stable trade relations and "stop playing tricks."
According to reports, China has recently introduced a number of new export controls involving rare earths, which has triggered a shock in the policy circles of the United States and Europe. Rare earth materials are widely used in high-tech products, from consumer electronics to fighter jets.
Since then, U.S. President Trump angrily threatened China again. After his "attack", what he received was a US$2 trillion sell-off in the U.S. stock market on October 10 local time, and the biggest decline in months.
The South China Morning Post noted that on October 12 local time, shortly after Greer made the remarks, Trump seemed to try to allay external concerns and send a signal that he was willing to reach an agreement with China to calm tensions.
Trump said on the same day that the United States wanted to help rather than hurt China."Don't worry about China, everything will be fine." After that, U.S. stock index futures rose that night. On the same day, US Vice President Vance said on Fox News that he hoped China would "choose the path of reason."
Bloomberg reported that Trump and Vance's remarks showed that on the one hand, the United States wanted to continue to exert pressure on China to withdraw its recent trade counter-measures, and on the other hand, it also tried to appease the market, indicating that the tit-for-tat escalation between China and the United States was not inevitable.
CNN said Trump’s speech had shifted from previously, suggesting he might not meet the threat of tariffs.
In fact, analysts quoted by the South China Morning Post have also seen through Trump's "tough appearance but weak inside" and believe that he may not truly implement the threat issued. Because Trump has a habit of backing down after making tough remarks, Wall Street calls this phenomenon "TACO", which means "Trump always chicks out."
“President Trump is unlikely to implement the threat to the end,” said Andrew Bishop, a senior partner at financial consultancy Signum Global Advisors, “The biggest risk is that Trump may have overestimated his code.”
"It's unclear whether both sides are willing to cool down at this stage to salvage bilateral engagement," said Wendy Cutler, deputy director of the Asia Society Policy Institute (ASPI), a US think tank and a former US trade negotiator."China has become increasingly confident that it has the upper hand in bilateral relations."
The Financial Times pointed out that since the "trade truce" was reached in Geneva, Switzerland in May this year, Sino-US trade relations have generally maintained a relaxed trend. Feng Chucheng, founding partner of Hutong Research, an independent consultancy, said that since the recent economic and trade talks between China and the United States in Madrid, Spain, both sides seem to want to avoid escalation of the situation.
However, this trend has changed after the U.S. decided to tighten export controls against Chinese companies in September this year, which further restricted China’s development of advanced semiconductor capabilities.
Feng Chucheng believes that from China's perspective, these US actions are not only substantively escalating tensions, but also once again confirming the Trump administration's "low credibility."
Wang Dong, executive director of the Chinese-foreign humanitarian exchange research base at the University of Beijing, said that Trump was hit by China's rare-earth new rules "in a hurry", which reflects the U.S. side's long-standing mindset that it can be "intentionally imposed tariffs without being punished" on China.
“At least we can say that there is a deep-rooted arrogance and self-confidence on the US side,” Wang said, adding that China is currently reversing the situation and creating a more balanced stage for the “Great Power Game.”
Wang Yuan, a professor at the Institute of International Relations at the People's University of China, pointed out that China's trade with the United States is decreasing and replaced by exchanges with global Southern countries and the Belt and Road initiative participants.
He believes that China’s countermeasures are aimed at telling the United States that it should return to a stable trade relationship and “no more tricks.”
For the current stalemate, financial advisory firm Signum Global Advisors predicts three scenarios.
In the worst case scenario, China will still stick to a tough stance, refuse to compromise with Trump, and be "happy to see him detonate the American economy with high tariffs before Thanksgiving and Christmas". Bishop, a senior partner of the company, said: "Unless he (Trump) backs down himself, it will be difficult to avoid tariffs, but it will not be easy unless he can find a decent step down."
On October 12th, at Joint Base Andrews, Maryland, USA, Trump boarded Air Force One to talk with reporters before going to the Middle East. Vision of China
A relatively optimistic scenario is that China agreed to buy Boeing aircraft and soybeans in exchange for U.S. tariffs, easing technology export controls, and acknowledging China’s efforts to reduce Fentanyl precursor exports.
“Given that the U.S. is entering the mid-term election year, Trump is keen to support farmers through soybean procurement,” Signum Global Advisors said, adding that one situation between the two is that the two sides agreed to calm down and return to the previous Geneva-London consensus.
On October 12, a spokesman for the Ministry of Commerce of China told reporters about the recent Chinese related economic and trade policy measures, saying that on October 9, the Chinese side issued export control measures on related items such as rare earth, which is the normal behavior of the Chinese government to improve its own export control system in accordance with laws and regulations.
The spokesman said that for a long time, the United States has generalized national security, abused export controls, adopted discriminatory practices against China, and implemented unilateral long-arm jurisdiction measures on many products such as semiconductor equipment and chips. Especially since the China-US Economic and Trade Talks in Madrid in September, in just over 20 days, the United States has continued to introduce a series of new restrictions on China. The US behavior seriously harms China's interests and seriously undermines the atmosphere of economic and trade talks between the two sides. China firmly opposes this.
The spokesman stressed that the threat of high tariffs is not the right way to deal with China. For the tariff war, China's position is consistent, we are not willing to fight, but we are not afraid to fight. China urges the United States to correct the wrong practices as soon as possible, take the key consensus of the two heads of state call as the lead, safeguard the difficult consultation results, continue to play the role of the Sino-U.S. economic and trade consultation mechanism, on the basis of mutual respect and equal consultation, through dialogue to solve their respective concerns, properly manage differences, safeguard the stability, healthy and sustainable development of Sino-U.S. economic and trade relations.