[Text/Observer Network Wang Yi] After US President Donald Trump used abnormally high tariffs to strike at China, China withstood the US's strikes and also counterattacked with a set of "combined punches." On local time June 5th, the "US-China Economic and Security Review Commission" of the US Congress convened an expert group consisting of economists, technicians, and entrepreneurs who were unwilling to give up, planning how to further suppress China economically and "prevent China from dominating supply chains."

The hearing of the "US-China Economic and Security Review Commission" on that day was divided into three parts, lasting from 9:30 am to more than 3 pm in the afternoon, focusing on the so-called "China supply chain risks," hyping up the "China threat," and various anti-China experts offered outlandish suggestions.

These experts stated that Trump's tariff policy has been proven unable to stop China's dominant position in global manufacturing, and may even backfire. They advised the commission to adopt "comprehensive and structural" measures to "prevent China from becoming part of key supply chains."

Adam Wolfe, an emerging markets economist at Absolute Strategy Research, claimed that US sanctions and tariffs have made China wary that its technological bottlenecks could be exploited by the US, leaving it at a disadvantage, which paradoxically has driven China to make efforts to develop high-tech and other manufacturing capacities.

"Sometimes tariffs are not the right tool," Nora Todd, who served as Senior Director for International Economics and Labor at the National Security Council during the Biden administration, agreed with Wolfe's view but hypocritically stated that "imposing tariffs on critical minerals like rare earths may not be the right solution," because "we do indeed need rare earths from China."

National Security Council International Economics and Labor Senior Director Nora Todd Video Screenshot

Todd then threw out an empty grandiose suggestion, "To address the threat of 'China Shock 2.0' and its overall industrial strategy, we need comprehensive (measures)."

The term "China Shock" began to emerge after China joined the World Trade Organization (WTO) at the beginning of this century. The West hyped that China's export growth had a "shock" effect on US and European manufacturing employment. However, in the 2.0 version of this argument, they began to slander that this "shock" was not market-driven but brought about by so-called state subsidies.

When mentioning the so-called "China Shock 2.0," Wolfe recalled Western allies who were similarly affected by the "China shock." He claimed that the US could work together with its allies to "build broad alliances to pressure China into closing some overcapacity."

After Wolfe and Todd spoke, executives and experts from pharmaceutical, defense, and chip sectors respectively mentioned issues facing key industry supply chains in subsequent panel discussions. However, after hyping up the so-called "China dominates supply chains" and "China threat," they all had to admit that the US supply chain cannot be separated from China in the short term.

Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said that China and India supply more than half of the active pharmaceutical ingredients consumed daily by Americans. However, regarding the sources and vulnerabilities of critical drug ingredients, more data is needed to investigate.

Billy Martin, an expert from the RAND Corporation, also pointed out that US defense manufacturers often use cheaper Chinese components under price pressures. For them, priority is product delivery rather than supply chain transparency, let alone some materials being sourced exclusively from China.

"The continuous motivation for every company is to reduce costs, which usually does not encourage isolation from China," Martin added.

Regarding the semiconductor industry, Sarah Stewart, CEO of "Silverado Policy Accelerator," also observed similar phenomena. She stated that the construction cost of major US chip manufacturing facilities is 37% to 50% higher than in China. The US needs "adequate, cost-competitive domestic manufacturing capabilities to provide alternative supplies."

Video Screenshot of Silverado Policy Accelerator CEO Sarah Stewart

Stewart believes that promoting investment in the chip sector by the US government might be one approach, and legislators also need to find ways to expand the US chip manufacturing industry.

From this round of the tariff war initiated by Trump against China, it is clear that the US is actually the more "unbearable" one. CNBC previously quoted analysts as saying that the general perception is that China's countermeasures are "strong and powerful." Bloomberg also pointed out that China not only retaliates at the tariff level but also takes a rational and firm stance on negotiation-related issues, not being led by the US.

Julian Evans-Pritchard, Chief China Economist at Capital Economics, previously analyzed that "judging from market reactions, I think the pain is greater for the US right now... The US is under greater pressure."

Regarding the tariff war initiated by the US, a spokesperson for the Chinese Foreign Ministry has repeatedly stated that China's position has always been clear: there is no winner in a tariff war or trade war. China does not want to fight, but it is not afraid to fight. If the US genuinely wants to solve problems through dialogue, it should stop the extreme pressure tactics, stop threats and blackmail, and engage in dialogue with China on the basis of equality, respect, and mutual benefit.

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Original source: https://www.toutiao.com/article/7512762624255066633/

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