China's Xi Jinping Redefines Country's Relationship with World, Challenging US Supremacy

Strategic Insights -

As Xi Jinping prepares for the trade war with the United States, he has been laying out a vision for turning the tables on the US in a confrontation. Tensions between China and the US had been simmering over earlier rounds of tariffs and technology restrictions. China's top leader has chosen an aggressive course of action, directing the state-controlled commercial banking system to lend an extra $2 trillion to industrial borrowers over the past four years, deepening China's position as the world's leading base for manufacturing. Xi has introduced new weapons of economic warfare, including export controls, antimonopoly laws, and blacklists for hitting back at American companies.

Key Takeaways:

  • China's Xi Jinping has been preparing for a trade war with the US for years, and has chosen an aggressive course of action, including imposing export restrictions on critical minerals and magnets.
  • China's state-controlled commercial banking system has lent an extra $2 trillion to industrial borrowers over the past four years, deepening China's position as the world's leading base for manufacturing.
  • Xi has introduced new weapons of economic warfare, including export controls, antimonopoly laws, and blacklists for hitting back at American companies.
  • The trade war has resulted in China imposing 125 percent tariffs on American goods, including semiconductors, lifesaving drugs, and other healthcare products.
  • The US has exempted Chinese smartphones, semiconductors, and other electronics from some of its tariffs, but the trade war still poses a significant threat to China's economy, with exports being one of the only bright spots in an economy badly weakened by a property crisis and sagging consumer confidence.
  • Experts estimate that if the trade war drags on, it could result in millions of lost jobs in China.
  • China's strategy reflects Xi's perception that China is no longer weaker than the US, and his ambition to restore China's glory and reverse a century of humiliation by foreign powers.
  • Xi has changed the rules to let himself stay in power indefinitely, made national security an all-of-society priority, and poured money into strategic industries like semiconductors to help China better compete with the US.
  • China has expanded its dominance in lithium-ion batteries, cutting-edge robots, solar panels, and wind turbines, and is catching up with the US in artificial intelligence.
  • Xi has tightened his grip over China's vast propaganda apparatus to rally the public for a protracted "struggle" against the US.

Statistics:

  • China's state-controlled commercial banking system has lent an extra $2 trillion to industrial borrowers over the past four years.
  • The prices of some critical minerals have tripled since China unveiled its curbs, according to Argus Media, a London commodities research firm.
  • China has imposed 125 percent tariffs on American goods, including semiconductors, lifesaving drugs, and other healthcare products.
  • The US has exempted Chinese smartphones, semiconductors, and other electronics from some of its tariffs.
  • Experts estimate that if the trade war drags on, it could result in millions of lost jobs in China.

Sources:

  • "Never Kneel Down!", a video posted by China's Foreign Ministry on social media.
  • Yasheng Huang, an expert on the Chinese economy at the Massachusetts Institute of Technology Sloan School of Management.
  • Zongyuan Zoe Liu, a fellow at the Council on Foreign Relations.
  • Shen Dingli, a Shanghai-based scholar who focuses on US-China ties.
  • Daisuke Wakabayashi, a reporter for The New York Times.
  • Berry Wang and Joy Dong, reporters for The New York Times.
  • Argus Media, a London commodities research firm.