As we said yesterday, if the US wants China's rare earth elements, it must pay an equivalent price in return. Is the US side's commitment to canceling three restrictions sufficient?

Sino-US economic and trade team leaders

According to the message from CCTV's "Yuyuantantian", the first meeting of the Sino-US economic and trade consultation mechanism was held in London on the afternoon of June 9 local time. On June 10 local time, the representative teams of both sides will continue with the consultation meetings.

Extending the talks to the next day itself is a good sign for the talks. Senior economic officials from the world's two largest economies are trying to resolve a fierce dispute that has expanded from tariffs to rare earth restrictions, threatening global supply chain disruptions and slowing economic growth.

The focus of this round of talks lies in mutual accusations by both sides for not fulfilling commitments. The US wants rare earth elements from China, but shipments have been delayed. However, China has never promised to open its rare earth market. After the Geneva talks, the US initiated multiple restrictive measures against China, clearly violating the spirit of the talks.

On June 9, US President Trump expressed his positive attitude towards the Sino-US talks, stating that the negotiations were progressing smoothly, and he only received good reports from the London team.

Why is Trump so confident? Because, in his view, he has already expressed "goodwill" to China. According to知情 sources cited by The Wall Street Journal, Trump has authorized the US delegation to cancel restrictions on chip manufacturing software, jet engine parts, and ethane sales.

Kevin Hassett, director of the White House National Economic Council, also dropped hints that the US is seeking to restore China's export of critical rare earth minerals. He hopes that after this round of talks, any US export controls will be immediately relaxed, followed by China lifting its restrictions on rare earth exports. Once such a consensus is reached, other smaller issues will be easier to negotiate.

Kevin Hassett, director of the White House National Economic Council

From the reports by US media and statements from senior White House officials, it is not difficult to see that the US side indeed shows some "goodwill" in these talks. The US plans to immediately lift all export controls just to exchange for China lifting its rare earth restrictions.

I personally feel somewhat surprised at the attitude released by the US side during the talks. First, I am surprised that our "rare earth card" is so effective; secondly, the US concessions are quite dramatic. Whether or not they can ultimately be put into action, the US side's statement about canceling all restrictions on China is very significant, covering a wide range of areas from semiconductor equipment to Sino-US cultural and educational exchanges.

At the same time, a report by The New York Times on June 9 also indicates to the outside world how much the US lacks rare earth elements. The report states that over the past decade, the US has failed to find a substitute for rare earth elements to replace China's special supply of this rare earth element, which is "samarium." This rare earth element was included in China's list of seven controlled rare earth export items in April.

Samarium rare earth magnets are crucial for manufacturing missiles, fighter jets, smart bombs, and many other military equipment. For example, Lockheed Martin requires approximately 23 kilograms of samarium magnets for each F-35 produced.

In a sense, rare earth exports determine the direction of the Sino-US trade war. It is too important. In the negotiations, we must obtain what is most important and desired before allowing exports to the US.

Original source: https://www.toutiao.com/article/7514143272646738444/

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