The Chinese Communist Party, apostle of free trade. In a strange new world, that was the strangest thing, as shares crashed in reaction to President Donald Trump’s opening salvo of tariffs in a global trade war.
“The market has spoken,” said the foreign ministry spokesman, Guo Jiakun, writing in English on Facebook – which is, by the way, banned in China. No double standards there, then. Beijing can always keep a straight face when it matters.
Politically, the Chinese government can scarcely believe its luck. It has stepped forward as a voice of reason and stability in a chorus of discord to promote the false narrative that it has been a model of good behaviour since it joined the World Trade Organisation (WTO) on 11 December 2001, a date that seems destined to live in the textbooks as the peak of globalisation.
The Trump tariffs “are a typical act of unilateral bullying”, complained a spokesman for China’s Commerce Ministry.
“This approach disregards the balance of interests achieved through years of multilateral trade negotiations and ignores the fact that the US has long gained substantial profits from international trade,” the spokesman added.
The official news agency, Xinhua, said the tariffs were “a weapon to suppress China’s economy and trade” and told the United States to stop undermining “the legitimate development rights of the Chinese people”.
It would be a mistake to write off Chinese rhetoric. The regime of Xi Jinping is serious and its actions speak louder than words.
Clue: China has listed “legitimate development rights” as one of its “red lines” in dealing with the US. The term is code for the export-led economic model which has propelled the country to the rank of second largest economy on earth since it joined the WTO.
Understand that and you understand that for China this is existential. There could be no greater contrast to the whirlwind in Washington than the disciplined, efficiently executed responses announced by Beijing in nine statements outlining reprisals that went beyond mere numbers.
Xi himself did not deign to speak publicly, let alone do anything as vulgar as posting on social media in capital letters. The Chinese public would have thought it beneath his dignity.
Untroubled by such niceties, Trump swiftly posted to his followers online that “CHINA PLAYED IT WRONG, THEY PANICKED.”
With all due respect to the American president, that is exactly what they did not do. The Xi hit list is ominous because it is well-planned and researched. The “Red Emperor” rules a mandarin class of sophisticated operators who do nothing else but study China’s opponents using every intelligence tool at their disposal.
The easy part for China was to impose reciprocal 34 per cent tariffs on all American imports from 10 April. It also suspended six American firms from exporting to China, launched anti-dumping actions in the medical sector and targeted the US giant DuPont with a probe into potential monopoly practices.
The hard part showed just how thoroughly the Chinese had done their work. No penguin islands or weird mathematics here. They banned the export of “dual use” items, which could have military or civilian applications, to 16 US firms, all in the technology sector.
Their key move was to put export controls on seven rare earth elements “to safeguard national security”. It’s on the public record that some of these are vital to US weapons systems.
The list of rare earths included terbium, which is used to enhance the properties of specialised magnets used in guidance systems, satellites and radar. The magnets are integral to the state-of-the-art F-35 fighter, Predator drones, cruise missiles and nuclear submarines.
Then there’s dysprosium, a rare earth of which China controls nearly all the world’s supply. It is used to make high-grade magnets that work in super-heated conditions and is found in the newest semiconductors. Other rare earths on the list are vital to jet engine turbine blades. All will now require special export licences.
China and America are thus in a new kind of war over technology and Artificial Intelligence. Both Biden and Trump tried to choke the supply of advanced semiconductors to Chinese manufacturers, while China is seeking to choke the supply of raw materials to America’s tech champions.
It’s not hard to see how dangerous this could get. The founder of free-trading modern Singapore, the late Lee Kuan Yew, once told me in an interview that “World War Two was caused because of empires and protectionism”.
He recalled that in the 1940s an oil embargo on Imperial Japan pushed its military leaders into war and he warned that if the West tried to isolate China economically “that is bound to lead to conflict”.
Lee was talking in the 1990s, when China stood on the threshold of globalisation. It joined the WTO only after hard-fought talks. But Charlene Barshevsky, who sealed the deal for the United States, later lamented that the Americans failed to use the WTO to punish Beijing when it broke the rules.
That created the belief that appeasement and elite inertia condemned the American working class to decline, the foundation story of Trump’s movement to Make America Great Again. So it is some irony that the Chinese have just filed a formal complaint about Trump’s tariffs – with the World Trade Organisation.
Michael Sheridan, longtime foreign correspondent and diplomatic editor of The Independent, is the author of The Red Emperor published by Headline Press at £25
