Highlights

• China prefers a long-term strategic response to U.S. semiconductor export controls.
• China may potentially restrict rare earth mineral exports.
• Tu Xinquan argues that U.S. measures reflect fear of China's growing technological capabilities.
• U.S. measures may harm global supply chains.
• The article suggests China aims to maintain trade openness and cooperation.
• China seeks to defend its economic interests against technological restrictions.

Recently, Cheng Yu, a journalist at China Daily, wrote "Countermeasures to Safeguard China’s Interests," offering insights into China's response to escalating U.S. export controls on semiconductors. Cheng interviews Tu Xinquan (opens in a new tab), dean of the China Institute for WTO Studies at the University of International Business and Economics, who argues that the U.S. measures reflect a fear of China's growing technological strength.

Tu emphasizes that China prefers a strategic, long-term approach over tit-for-tat retaliation, aiming to advance its development and economic growth. Key countermeasures discussed include potential export restrictions on rare earth minerals while promoting trade openness and cooperation with global partners.  The restrictions on rare earths could prove quite problematic for the United States, given the dependence on the Chinese processing industry.

The author’s key premise is that the U.S.'s restrictive policies are counterproductive and may harm global supply chains and its own businesses. Tu highlights China’s unique market dynamics and contributions to stabilizing global inflation, advocating for reducing trade tensions through expanded cooperation.

However, major assumptions underpinning the analysis include the inevitability of U.S. policy failure and the effectiveness of China's diversified engagement strategies without fully addressing potential internal challenges, such as its own regulatory barriers or the efficacy of countermeasures in a highly interdependent global economy.  Rare Earth Exchanges would also note that it is not just the United States that is making moves for rare earth element independence.   The China Daily piece fails to acknowledge this important fact.

Rare Earth Exchanges raises some critical questions that were not addressed by the author.  How does China plan to balance strategic independence with continued reliance on foreign technology? What is the timeline for reducing semiconductor dependencies? As well as the potential global impact of restricting rare earth exports.

Not surprisingly, the article reflects a pro-China stance and positions the country as a stabilizing force in a fractured global economy, which may overlook nuanced perspectives from non-Chinese stakeholders. While insightful, we suggest the analysis could benefit from a more balanced examination of potential risks and limitations in China's approach.