| As The Economist has argued for the best part of two centuries, in trade wars both sides tend to get hurt. But if a fight is unavoidable, it makes sense to prepare. This is what China has been doing since the first Trump administration, as our cover package describes. And that is one reason why China is winning.
Our briefing begins the story seven years ago, when China's rulers took stock of President Donald Trump, realised that a serious trade war was likely, and set about identifying and fixing their country's vulnerabilities. They also studied America's weak points, in case they ever needed to exploit them. This foresight is paying off.
Fast forward to today, and America is reeling at the realisation that China could seriously hurt it by weaponising its dominance of rare earths, crucial ingredients in everything from cars to fighter jets. Its new rules not only restrict the export of rare earths, but also require foreign firms to seek a licence to export rare earths obtained using Chinese equipment, or magnets containing more than a trace of Chinese rare earths. As our leader explains, Xi Jinping is trying to develop and enforce a new set of global trading norms on the ruins of the old liberal order. Roughly speaking: cross China, and it can paralyse your high-tech factories.
Much could still go wrong for China. Unless used with care, its new tools of economic coercion could alienate its trading partners, and send them rushing to find ways to reduce their dependence on Chinese goods. But for now, China is showing that it cannot be pushed around, and that the people in the White House who dismiss its economy as "weak" have grievously underestimated it.
China's rivalry with America was one of several topics our editor-in-chief, Zanny Minton Beddoes, and Ed Carr, our deputy editor, covered in their Insider interview with Steve Bannon, one of the architects of the MAGA movement. The conversation also touched on whether America is at risk of civil war and the possibility of Donald Trump serving an unconstitutional third term. It makes for alarming, confounding and compelling viewing. If you are a subscriber you can watch it now via our Insider hub. |
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