Scott Bessent: China’s Rare Earths Strategy a Critical Misstep
Scott Bessent, the US Treasury Secretary, expressed that China has made a significant miscalculation by threatening to restrict its rare earths exports. Despite this, he assured that the United States could secure alternative sources within the next two years.
US-China Relations and Rare Earths Strategy
This statement emerged after a summit between US President Donald Trump and Chinese President Xi Jinping in South Korea. Bessent indicated that both leaders had established an “equilibrium” following recent tensions but cautioned that China’s use of critical minerals as a pressure tactic would be limited to 12 to 24 months.
Tensions and Trade Talks
- Recent tensions escalated when China imposed extensive controls on rare earths.
- This reaction followed new US export controls and risked breaking a temporary ceasefire.
- The Trump-Xi meeting was the first since 2019, and occurred in the midst of heightened trade pressures.
Bessent noted that the exertion of control over rare earths by China might provoke a global backlash. During negotiations in Malaysia, he managed to salvage trade discussions with Chinese Vice Premier He Lifeng, reaffirming a cooperative stance for the upcoming year.
Key Agreements and Future Cooperation
The leaders agreed to postpone China’s rare earths strategy. Additionally, an arrangement was made for China to purchase US soybeans and facilitate American ownership of TikTok. Bessent stated that transactions concerning TikTok would materialize shortly.
| Agreement | Details |
|---|---|
| Rare Earths Controls | Delayed implementation by China |
| US Soybean Purchases | China committed to buy significant amounts |
| TikTok Control | American investors to take over |
Bessent also mentioned a reduction in tariffs related to fentanyl, highlighting its significance in US discussions. The administration believes addressing this issue is crucial for American safety.
Future Outlook
Observers suggest that the US and China may merely pause their hostilities without achieving substantial changes in their relationship. However, Bessent contended that the US would continue to push for necessary reforms in China’s economic practices.
The Secretary underlined that global exports from China would shift due to rising tariffs, impacting economies in the EU, UK, and beyond. He added that the US trade deficit with China has already decreased by 25% this year, demonstrating a potential shift in economic dynamics.
Bessent concluded that Trump’s recent visit to Asia had solidified America’s position as a premier destination for investments and innovation. He expressed confidence that the recently negotiated deal would be finalized successfully, noting enhanced communication channels between the two nations.
