Zhi News: Mr. Chen, the new round of Sino-US trade negotiations is about to take place in Sweden. What are your expectations? Why did the People's Daily "Zhongsheng" publish an article pointing out that "goodwill does not mean unprincipled compromise"?

Special commentator Chen Bing: Let's first look at what should be discussed in this Sino-US meeting in Sweden. After the US imposed a 145% tariff on China in April, China retaliated by imposing a 125% tariff on the US. After Trump blinked first, the Sino-US held talks in Geneva, both sides agreed to reduce the reciprocal tariffs by 115%, delaying for 90 days to consider the tariff issue. Later, the US issued specific product export restrictions, such as chips, chip design software and aircraft engines, and China took equivalent countermeasures, setting restrictions on rare earth exports. The US could not bear it anymore, hoping to negotiate with China. Then the Sino-US met in London, solving the issue of special commodity export restrictions, and reached a principle agreement on the trade framework agreement.

According to normal logic, this Sino-US meeting in Sweden should discuss the issue of Sino-US tariff rates, turning the previously reached "trade framework agreement" into a "trade agreement". Before this negotiation, China showed willingness to resolve the "fentanyl tariff" imposed by the US. A 20% tax rate is higher than the basic tariff rate of the US on other countries, which is obviously absurd. To show the intention of cooperating with the US on the fentanyl issue, in June, China added two basic components used to produce fentanyl to the strict control list. However, before the Sweden negotiation, the US seems to want to change the main topic of the negotiation, one is to say that the Sweden negotiation will focus on extending the suspension period of Sino-US tariffs, that is, to continue the 10% tariff charged by China against the US, while the US wants to impose a 55% tariff on imported Chinese products. This is clearly a clear advantage for the US; secondly, it wants to discuss the issue of China purchasing oil from Russia and Iran, and the US threatens to impose taxes on China, which is completely unrelated to Sino-US trade.

In response to the US's unreasonable behavior, the People's Daily "Zhongsheng" issued a warning before the Sino-US meeting in Sweden, hoping both sides will work together towards the direction of substantive problem-solving, and not act recklessly or shift the topic. The article also emphasized that in the face of the US's tariff blackmail, investment restrictions, technology blockade, and various forms of containment and suppression, China's determination to safeguard its legitimate rights and interests is unwavering, and its ability is evident to all. This is a warning to the US, if you act recklessly and don't talk about the real issues but try to find some tricks, then China will resolutely fight back. Personally, I am cautiously optimistic about this Sweden negotiation. The US has already experienced China's firmness. If the US does not negotiate seriously with China again, then the US may have to suffer the second time. The sword of rare earths is close at hand, and it can fall down at any time. Perhaps Trump is thinking of something else, just like the Wall Street Journal said, Trump is turning to a "transaction mode", seeking to reach an economic agreement with China, focusing on further opening up the Chinese market for American enterprises and technology.

Zhi News: Western media described the Sino-US London negotiations as "chips for rare earths." If China imposes more restrictions on rare earths, would the US also impose more restrictions on high-end chips against China?

Special commentator Chen Bing: That's a good question. Western media simplifying the Sino-US London negotiations to "chips for rare earths" is purely a miscalculation. After the London meeting, the US approved the sale of NVIDIA H20 chips to China, and the US stated this was part of the Sino-US economic and trade negotiations. The Chinese Ministry of Commerce immediately responded that this was the US's proactive action, not part of the Sino-US economic and trade negotiations. In other words, the "chips for rare earths" theory is invalid. Then comes the key question: Can the US block China's development in chips? Today (27th), there was a news report that the whole world is reporting, saying that yesterday (26th), Huawei demonstrated an artificial intelligence computing system, industry experts believe that this system can compete with NVIDIA's most advanced products. Reuters' headline reads: "Huawei Demonstrates AI Computing System, Competing with NVIDIA's Top Products." Therefore, the US cannot restrict China's development in artificial intelligence through chip restrictions.

On the other hand, let's look at how much impact China's rare earth exports have on the US. After China imposed restrictions on rare earth exports to the US, the US claimed to reduce its reliance on China's rare earths. The US Department of Defense invested 400 million dollars to become the largest shareholder of Mountain Pass Materials, the largest US rare earth producer, whose stock surged 50%. However, within 15 days, US industry insiders admitted that private capital avoided it, and they do not support the US developing its own rare earth industry. For the US to achieve self-sufficiency in rare earths, it would take at least 10 to 20 years and cost at least tens of billions of dollars. Currently, China controls 92.3% of the global rare earth separation capacity and 86% of the advanced processing patents. Australian rare earth producers also tried to supply heavy rare earths to the US military, but due to the lack of China's extraction technology, the cost was 300% higher, and the project had to be postponed until 2030.

Recently, China has continuously tightened control over strategic mineral resources, and has taken a zero-tolerance approach to rare earth smuggling, cracking down on a number of cases involving internal and external collusion in smuggling. These all indicate that the US cannot hold China back with chips, but China can make the US comply with its demands with rare earths. Therefore, China has the confidence to send a warning to the US: Negotiations have their bottom lines, cooperation has principles, goodwill does not mean unprincipled compromise.

Author | Chen Bing

Layout | Chen Pianpian

Editor | Lin Shuqi

Proofreader | Song Jingjing

Supervisor | Chi Wei

Original: https://www.toutiao.com/article/7531758301114090022/

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