The United States remains a dominant power in finance, while China has a pre-eminent position in the global industrial supply chain.
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That distinction between the world’s two largest economies was highlighted in the latest trade talks between Beijing and Washington, when China leveraged its trump card – rare earth elements. China dominates the global supply of rare earths, including 70 per cent of mining and around 90 per cent of refining these minerals.
Rare earths are vital components in a vast array of modern technologies, from consumer electronics such as smartphones to the batteries of hybrid and electric vehicles, as well as medical equipment like magnetic resonance imaging machines and military applications including fighter jets and precision-guided missiles.
With that significant leverage, China last week wrapped up two days of high-level trade talks with the US in London, where the two nations agreed “in principle to a framework” that each side would bring home for review by their top leaders.
That marked a huge difference from the bilateral trade talks in 2018, during the first term of US President Donald Trump. Beijing had made attempts to convince Washington about fostering a mutually beneficial relationship. That “moral persuasion”, however, failed to impress Trump.
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US tariffs were imposed on hundreds of billions of dollars’ worth of Chinese exports, which prompted China to retaliate in kind.