America and China are face to face. This is an open clash between Donald Trump and Xi Jinping. The two have been given the ground for this wrestling between the two by Tariff War started by Trump. Both of them increased such tariffs on the goods coming from each other as if they were bidding in a auction. The current situation is that the US has imposed a 145 percent tariff on goods coming from China, while China has imposed a tariff of up to 125 percent on goods coming from America.
Now the question is, whose pan is looking heavy? Chinese President Xi Jinping is on a tour of Vietnam, Malaysia and Cambodia among Tariff War. Trump has said that Xi Jinping is doing this tour to remove the trick of how to harm America. On the other hand, China has completely banned the export of rare economy metals from its country. It is also seen as a strategy to pressurize Trump.
Let us try to know which cards are in the hands of China and Xi Jinping which can prove to be a trump card.
1. Rare Earth Metals Jinping made a weapon in a trade war?
Between the growing trade war from the US, Beijing has banned the export of many important rare earth elements, metals and magnets. This move of China is big in itself because 90% of all the rare meanings that come out worldwide are inside China. That is, China has almost monopoly on them. Now you can ask that if China does not give rare meaning metals, then what will be wreaked havoc. Let us tell you here that in the era of today’s technology, rare meaning metals are such factor from which control can be maintained in your hand. In fact, from weapons to electronic equipment, caring to making aerospace, from making semiconductor and making consumer goods, there are components of rare meaning everywhere.
Now China has started choke the US by stopping their exports. It is true that the US has gradually reduced the import of rare meaning from China from 80% in 2017 to about 70% in today’s time. But right now the US is also being imported from other countries, it is also reaching from China and reaching it. That is, many American defense contractor or high tech companies are still dependent on China by turning around for their products.
2- Xi Jinping depositing ‘neighbors’?
Between the trade war, Chinese President Xi Jinping has set out on a 5 -day visit. On Monday, he reached Vietnam where he met top leader to lam, called for strong trade relations and signed dozens of cooperation agreements including increasing supply chains. After this, they are reaching Malaysia and Cambodia.
Xi Jinping’s Vietnam Yatra provides an opportunity to strengthen a relationship with a neighbor, which has received billions of dollars of Chinese investment in recent years. The Chinese -based manufacturer had already moved to this country to avoid the tariff imposed by the Trump administration.
Xi Jinping had planned to travel to these three countries even before Trump’s tariff announcement, but coincidentally, the journey is being done between the trade war. In such a situation, it has become an opportunity for China. Xi Jinping wants to show in front of these neighboring countries that Washington’s policy in Trump’s leadership is chaotic and repeatedly reverses. In contrast, Jinping is presenting China as a stable trading partner.
3- Purchased the US Treasury Bill and took control in hand?
To understand this point, you must first know what is the treasury bill. As a result, it is a means of depositing the money of the government. The Treasury Bill is a money market instrument issued by the government of a country. Suppose the government needs 900 rupees. So he will issue 10 Treasury Bills of Rs 100-100, which companies or other countries will buy for Rs 90-90. There is no interest on these bills, but a bill of 100 rupees is purchased for 90 rupees and after a special time, he gets 100 rupees for giving back the Treasury Bill to the government. This is what earns.
Now let’s come back how China can handle these American Treasury Bill. After Japan, China has the highest number of American Treasury Bills- they cost $ 760 billion. That is, in a way, America has borrowed so much money from China. Now China can use these treasury bills against America. If China starts selling these treasury bills at a low price, then the price of US dollar will start falling. According to Alajjira’s report, Alex Jacques, the head of policy and advocacy in the Economic Think Tank, Groundwork Collaborative, said that it could have not only domestic but global results and really unexpected results.
At the same time, James Mohs, professor of accounting, taxation and law at New Heaven University, says that if China buys more part of the Treasury Bill issued by the US, the situation can be worse. In this case also the dollar can be weak because the debt on America will increase further.
4- Target on America’s agriculture sector
China can target major agricultural export areas of America like poultry and soybean whenever they want. These sectors of America are very much dependent on the demand coming from China and are concentrated in states who have voted for Trump. China can give a shock to Trump’s vote bank by jerking them. About half of the US’s soybean exports and about 10% of American poultry exports fall in China. On March 4, Beijing has canceled import approval for three major American soybean exporters.
5- Target on American tech companies producing in China
Many American companies like Apple and Tesla are deeply connected to China for their production. There is a danger of a significant decrease in their profit margin from tariffs. Beijing believes that it can be used to take advantage of the Trump government. Beijing is allegedly planning to retaliate through regulatory pressure on American companies working in China.
(Input- the Conversation, Al-Jazeera)
Also read: What kind of ‘chicken game’ is going on between Trump and China?