China warns of supply chain disruption amid trade tensions
What's the story
China has warned that supply chains could be disrupted as major trading partners consider new strategies to tackle growing imbalances and reduce reliance on rare earths. "Unilateralism and protectionism are on the rise, the risk of global supply chain fragmentation is growing," said Chinese Vice Premier Ding Xuexiang at the opening ceremony of China International Supply Chain Expo in Beijing on Monday.
Trade dynamics
G7's rare earth import restrictions
China's growing trade surplus with major partners has drawn attention in recent months. The European Union is considering new measures to counter this export surge. Meanwhile, the Group of Seven (G7) countries recently agreed that no country should provide more than 60% of its rare earths imports from a single country by 2030, as part of efforts to reduce dependence on China.
Retaliation
China's export controls
In response to the G7's move, China has imposed export controls on two US rare earth producers. This is not the first time China has used its control over rare earths supply chains as leverage. Last year, it restricted their exports in retaliation against Donald Trump's tariffs. Rare earths are crucial for manufacturing modern technologies from smartphones to fighter jets.
Defense
China's competitiveness lies in its complete industrial chains
In his speech, Ding defended China against accusations of unfair subsidies and unbalanced trade practices. He argued that China's competitiveness lies in its complete industrial chains and huge market. Earlier this year, China announced plans to establish a comprehensive new mechanism for ensuring the security of its supply chains. The regulations would allow government agencies to initiate security investigations against foreign entities if they impose discriminatory bans or take actions threatening national supply chain security.
Economic impact
China's economic situation
The rising trade tensions could further complicate China's economic situation, which is already showing signs of stress. Data released last week showed consumer spending and investment have both fallen to levels not seen since the pandemic. These figures highlight persistent weaknesses in China's economy, despite strong exports and easing geopolitical tensions around Iran providing a temporary buffer.