The US-China trading war is escalating. But China can have a larger lever than to think the USA

As the trade war increases between the USA and China, the biggest questions are which side has a larger lever and is ready to tolerate more pain.

Last year, China exported over $ 400 billion to the United States, much more than American companies sold China. That is why Trump's administration claims that he has a whole lever.

“The ball is in China. China must conclude a contract with us. We do not have to conclude a contract with them,” said the press secretary of the White House Karoline Leavitt on Tuesday.

“China wants what we have; every country wants what we have: an American consumer. Or saying that they need our money,” she told journalists in Washington.

But the commercial landscape is more complicated. Experts say that China believes that they can both cause more damage to the US and tolerate more pain as a result of a tariff war.

“China has many cards to play. He has a large lever,” said Jia Wang, an older employee at the China Institute at the University of Alberta.

Changing China's response

Contemporary US-Chin trade is dominated by technological products and electronics, from iPhones to computers to batteries.

But Wang claims that there is a huge export of key industrial outlays that will be very difficult to replace the US, because China controls a significant part of world production. For example, in a retaliation metor, he banned the export of some critical minerals at the beginning of this month.

Ban includes seven elements and magnets of rare lands used in defense, energy and automotive technologies.

“It really hurts American industries, and very few countries can really fill this gap,” she said. “There is simply not enough time for other suppliers to quickly come to the market and provide the US needed amount … so this is a very powerful card that China can play.”

Wang also pointed to the fact that China is the second largest foreign creditor of America, having about $ 760 billion In tax securities from January.

Unlike the trade war in 2018, when China quickly tried to negotiate a break in tariffs, this time Beijing adopts a more aggressive approach.

“If the United States really want to solve the problem through dialogue and negotiations, they should stop exerting extreme pressure, stop threatening and blackmailing and talking to China on the basis of equality, respect and mutual benefit,” said spokesman of the Ministry of Foreign Affairs of Lin Jian.

Meanwhile, the Chinese president XI Jinping gives concerts in Southeast Asia countries to increase economic ties and put China as a more reliable partner than the USA

Export in the USA is only one part

Spencer Hakimian, investment director of Tolou Capital Management in New York, claims that China has already spent years of diversification of commercial partners.

“China exports to the USA have been flat in the last 13 years,” he says. But at the same time, he says, his exports to the rest of the world increased by over 80 percent.

Even during the first presidency of Trump, he says that China was more exposed to American tariffs. Today he says that China exports to the USA is $ 400 billion for a gross domestic product worth $ 20 trillion in total.

“It's two percent of their economy,” he said. “Yes, so it hurts, but when you have an economy growing five percent and you have a one -time loss of two percent, it is not as significant as you really think.”

He says that China had a long -term strategy and a clear plan for what he was supposed to do after applying American tariffs.

Compare, he says, with a chaotic approach from Washington, whose tariff indicator to China is constantly changing. When the markets fell last week, Trump unilaterally scald things with widespread release. His best types of office offered a completely different justification for tariffs, sometimes even denying each other. Some have found that the tariffs are permanent and are aimed at increasing income, while others have found that they are a lever point for accurate commercial concessions.

“I am an American, I support my country, I want the Americans to win this trade war,” said Hakimian, “But I also have to be objective because I am a global asset manager and this is my job. Of course, the Chinese are more prepared for it.”

Higher pain tolerance

Last week, two well -known Chinese experts published a research article in Washington, showing the emerging Beijing strategy.

Evan Medeiros and Andrew Polk wrote about what they called “precise economic ammunition”, which go beyond critical mineral controls. They say that this includes considering antitrust research of foreign enterprises. After the last trade war in the US, China introduced a provision called the list of unbelievable entities, which may be hindered by targeted business in this country.

First of all, China has more tolerance for pain in the trade war.

Wang claims that the Chinese communist party does not have to worry so much about angry consumers with nervous economic influence of the trade war, just like the American administration.

“Considering all chaos in the US, it is still an election system. So President Trump and his office still have to watch how the polls will react to the situation,” she said.

Fold all this, and the Chinese approach to the trade war begins to shape. Chinese leadership believes that this can cause real pain, even when it uses a crisis to strengthen bonds with neighboring countries.

Finding a way out is a difficult part of any conflict. The US seems to think that China can force China to make accurate concessions on its terms. Just a week after this trade war, it turns out to be more complicated than many.