Myra P. Saefong of Market Watch reports that China is making significant investments in munitions and in acquiring high-end weapons systems as Beijing tightens its grip on critical metals. Saefong writes:
China has been sending the U.S. a clear message that it stands ready to harness its monopoly on the production of strategic metals used in a variety of technologies, such as computer chips and military applications, as a weapon in trade negotiations, even before President-elect Donald Trump returns to the White House.
It’s the latest flare-up in Beijing’s trade war with the U.S., but it also serves as a warning shot from China, in that it comes before the scope of any potential new tariffs on goods coming from China are known.
“Global markets are unprepared for the impact of China’s recent export restrictions on the semiconductor, battery and defense-equipment industries,” said Mark Williams, a risk-management expert and finance professor at Boston University’s Questrom School of Business. […]
Trade-war ‘firsts’
China’s latest restrictions marked “several firsts in the trade war,” Gracelin Baskaran, the director of the Critical Minerals Security Program at the Center for Strategic & International Studies, and Meredith Schwartz, a research associate in the program, wrote in an article earlier this month. This was the “first time Chinese critical minerals export restrictions were targeted at the U.S. rather than all countries, and the first time restrictions on critical minerals were a direct response to restrictions on advanced technologies,” they wrote.“Critical mineral security is now intrinsically linked to the escalating tech trade war,” they added.
Baskaran and Schwartz said China is making “significant investments in munitions and acquiring high-end weapons systems and equipment at a rate that is five to six times faster” than the U.S.
“In terms of strengthening military preparedness, China is operating in a wartime posture while the U.S. is operating in a peacetime posture,” they said.[…]
“In the short term, it is crucial for the U.S. to maintain open trade with China as a key partner and exercise caution in blindly escalating tariffs,” he said. “However, in the long term, the U.S. must prioritize national security by investing in, finding and securing control over the mining of these vital raw materials.”
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