Welcome to the 239th edition of Trade War. I started this publication exactly five years ago this month in December 2019, so this issue also marks its fifth anniversary.
I’m happy to report that Trade War is growing strongly with some 5,000 subscribers from business, finance, government, and academia as of today. And for better or worse, Trade War is becoming even more topical, as the next US administration threatens ever more tariffs and China retaliates, this week with Beijing’s announcement of a ban on the export of critical minerals.
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On to the news ~
Top leaders will discuss the GDP target for next year and what further stimulus measures should be taken at an economic confab this week. China warns against growth ‘worship.’ And economists are censored suggesting heightened worries amongst Chinese leaders about the weakening economy.
China hits back at the US, announcing export restrictions on critical minerals in response to Washington’s latest curbs on Chinese semiconductors. The Uniqlo Xinjiang cotton brouhaha is getting more serious. And a US ban of TikTok looks imminent.
Trump appoints a new US ambassador to China. And could China break Elon Musk’s cosy relationship with the American president-elect?
Notable/In depth ~
Traditional car makers in China fret about EV subsidies
China has become a global export juggernaut but will it last?
And the story of a benevolent Chinese patriot turned US spy
Could China break Elon Musk’s relationship with Trump?
Could China break Elon Musk’s cosy relationship with the next U.S. president?
There is a serious risk Musk will find himself stuck between a rock and a hard place—his desire to see U.S.-China relations remain on a relatively even keel and thus not damage his deep business interests in the country—and Trump’s intention to start his term by striking a hawkish pose towards China.
“Experts say there is a clear contradiction that underlies the budding ‘bromance'—their approach to China,” reports The Telegraph’s William Yang.
“Musk has huge skin in the game when it comes to U.S.-China relations and he doesn’t need an angry China to lash out at his company because they are upset with Trump,” says Dexter Roberts, from the Atlantic Council’s Global China Hub (and author of this newsletter), citing the massive Shanghai Tesla factory as one key example.
If Trump follows through with more tariffs, “Tesla and Musk’s entire empire are going to be hurt, so he may want to play a role in influencing the Trump administration’s China policy,” he adds.
However, that is likely to be difficult. “Musk doesn’t have a policy role and Trump doesn’t need him to open doors to the Chinese government. Additionally, the China hawks in his cabinet may not easily let Musk take charge of the Trump administration’s China policy,” Roberts says.
“We are seeing a real line-up of serious China hawks among Trump’s cabinet nominees, including Marco Rubio, who is banned from entering China, and Mike Waltz, who has said that the U.S. is in a new Cold War with China,” he says.
“Musk could be caught in the crossfire and if he were to lose his relationship with Trump, it would happen over U.S.-China relations,” Roberts says. There is a real risk Trump could “dump him.”
CEWC to discuss GDP target, possible stimulus
Top Chinese leaders will discuss the GDP target for next year as well as what further stimulus measures should be taken in 2025, at an economic confab this week in Beijing.
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