Highlights
- Li Zhi criticizes US trade war tactics, demonstrating that tariffs have not achieved intended economic objectives.
- The article exposes China’s strategic economic practices, particularly in rare earth elements and critical minerals.
- Suggests the need for cooperative governance and creative deal-making between the US and China to foster economic stability.
Li Zhi (opens in a new tab), assistant dean of the China Institute of Development Planning, Tsinghua University (opens in a new tab) argues (opens in a new tab) that the United States should abandon the pursuit of a trade war with China, contending that such conflict would only inflict mutual economic harm and destabilize global trade. Li Zhi underscores that past U.S. trade wars, including those wielded during the Great Depression and the recent “Make America Great Again” tariffs, led to soaring domestic prices, stifled manufacturing investments, and disrupted global supply chains without yielding the promised benefits. He points out that despite the tariff measures, bilateral trade between the U.S. and China has risen significantly from over $520 billion in 2016 to over $680 billion in 2024, with the U.S. trade deficit expanding concurrently. Li Zhi further contends that modern global trade is deeply interwoven through complex industrial and investment networks that render blunt instruments like tariffs potentially obsolete while asserting that efforts to pressure China only strengthen its resolve to innovate and pursue self-reliance.
Zhi’s national economic bias is loud and clear in the China Daily (opens in a new tab) piece. For example, he touts:
“It can be said that the US’ desire to contain China has been an unrealistic dream divorced from reality, and the time and situation in which it may have been possible to contain China have changed and passed. The more China is pressed, the stronger China will be. History has proven that the winner of a protracted trade war is bound to be China.”
Indeed, while this posturing permeates the piece, it falls short of offering a candid assessment of the problematic free market practices across the Pacific.
Yes, the author sidesteps a critical analyses of China’s own enduring behavior. While Zhi convincingly details the economic fallout from U.S.-initiated trade wars, he avoids addressing China’s state-backed strategies, such as its proactive industrial policies and strategic investments, which enable it to weather and even benefit from economic pressures.
Obviously for purposes of this media, rare earth elements and critical minerals comes to mind. China often does not adhere to free trade principles in the rare earth sector as a glaring example. The Chinese government maintains tight control over the production and export of rare earth elements through state-owned enterprises, strategic subsidies, and export quotas. These practices allow China to manipulate global supply and pricing, effectively creating a monopolistic environment that distorts market competition.
By favoring domestic over international companies, China undermines fair trade and stifles innovation in other nations, leaving them dependent on its controlled resources. Such measures not only disadvantage foreign industries but also raise concerns about geopolitical leverage and market transparency in critical technology sectors.
This omission leaves unanswered how China’s non-market maneuvers might further complicate efforts at fair competition and effective policy coordination. Overall, Li Zhi’s piece on the one hand seeks to have the U.S. reconsider a zero-sum approach to economic relations, advocating for smart competition and cooperative governance. Meaning a call for both nations to leverage their intertwined interests to build a more stable and mutually beneficial global economy. On the other hand, this call demands a candid, on-the-ground self-critical evaluation—something that Zhi ultimately fails to deliver.
Rare Earth Exchanges agrees that President Trump probably needs to visit China and make some creative deals. He is certainly the man, if anyone, to accomplish such a feat. Free trade and prosperity are always welcome over trade wars and conflict.
It’s uncertain whether America’s leadership fully grasps the gravity of the global rare earth and critical mineral deficit—that is, how dominant China has become and how far behind the U.S. truly is. If they did, we’d likely already have a mineral czar and a robust industrial policy in place. Alternatively, a third path might involve creative, shrewd deal-making led by Trump, specifically targeting rare earths and critical minerals, among other strategic topics.
Just in case we cannot hold our collective breath, the USA should start planning for resilience in mission-critical supply chains.
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