China's recent moves have sent a clear message to the world, and especially to the US: they've got the upper hand in the trade war.
Last week, China's Ministry of Commerce dropped a bombshell - a document titled 'Announcement No. 62 of 2025'. It might sound like bureaucratic mumbo-jumbo, but this announcement has rocked the fragile peace between China and the US.
The announcement detailed new restrictions on rare earth exports, a move that tightens China's control over these critical minerals. Rare earths are essential for producing everything from smartphones to fighter jets, and China has a near-monopoly on their processing.
Under the new rules, foreign companies now need Chinese government approval to export products containing rare earths, even in tiny amounts. This has sparked a strong response from US President Donald Trump, who threatened to impose additional tariffs on Chinese goods and put export controls on key software.
US Treasury Secretary Scott Bessent described it as a 'bazooka pointed at the supply chains of the free world'. He added, 'They have the leverage, and we're not going to let them have it.'
But here's where it gets controversial: China's new controls are designed to 'shock the system', targeting vulnerabilities in American supply chains. Naoise McDonagh, an international business lecturer, said, 'The timing has really upset the negotiation timeline the Americans wanted.'
Rare earths are crucial for a wide range of technologies, from solar panels and electric cars to military equipment. For instance, a single F-35 fighter jet requires over 400kg of rare earths for its components.
China's dominance in rare earth processing is no accident. Marina Zhang, a critical minerals researcher, explained, 'Beijing has nurtured a vast talent pool and a research network years ahead of its competitors.'
While the US and other countries are investing in alternatives, they're still far from achieving that goal. Australia, with its large rare earth deposits, is seen as a potential challenger, but its production infrastructure is underdeveloped, making processing relatively expensive.
The new restrictions expand on measures announced in April, causing a global supply crunch. China's economy, however, is unlikely to be significantly impacted by the drop in exports, as rare earths make up a very small part of its $18.7tn annual economy.
Despite the accusations of 'betrayal', Bessent has left the door open for negotiations. He believes China is open to discussion and is optimistic about de-escalation.
Prof. Sophia Kalantzakos from New York University said, 'What China has done is get its ducks in a row ahead of trade talks with the US. By curbing rare earth exports, Beijing has found its best immediate lever to pressure Washington.'
Jiao Yang from Singapore Management University believes that while Beijing holds the cards in the short-term, Washington has strategic options. The US could offer to lower tariffs, which might be attractive to Beijing, as the trade war has hit its manufacturers hard.
Washington can also threaten more trade restrictions to hinder China's technology development. For example, the White House has already targeted China's need for high-end semiconductors by blocking Nvidia's advanced chip purchases.
But experts say these measures will only have limited effects. Prof. McDonagh stated, 'Targeting Beijing's tech industry may slow them down, but it won't stop them dead in the water.'
China has shown it's willing to take some pain to achieve its long-term goals. Prof. McDonagh added, 'China can carry on even under US export controls, but if China cuts off rare earth supplies, that can stop everyone's industry. That's the big difference.'
So, what do you think? Is China's move a strategic masterstroke, or a risky gamble? Let us know your thoughts in the comments!
