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Bangkok Post
17-07-2025
- Business
- Bangkok Post
China believes it is winning Trump's trade war
The most recent trade talks between the United States and China in Geneva and London provided little more than temporary relief in the conflict between the world's two largest economies. Despite US President Donald Trump's efforts to tout the stopgap measures as a "deal" that benefits America, China reads the scoreboard differently -- and believes it is winning. From its vantage point, it has weathered the storm and emerged more confident, more self-reliant, and more convinced that its long game is paying off. Since the grinding Sino-American trade war began in 2018, China has crafted a playbook that blends defensive and offensive strategies to mitigate its vulnerability to tariffs and sanctions. On the defensive front, China has rerouted trade flows, developed hedge against the dollar-based global financial system, and accelerated investment in indigenous technologies. It has also made a concerted push to boost domestic consumption, although not as an end in itself but as a means to reinforce strategic sectors like artificial intelligence applications and green tech. On offence, China has tightened export controls and demonstrated a readiness to retaliate swiftly and surgically. Chinese authorities' response to the second Trump administration's tariff threats and escalations reflects this tactical flexibility and steadfast resolve. Over recent months, China has hit back almost immediately, taken a hard line in negotiations, and generally refused to be cowed. It is not merely reacting to pressure; it is redefining the US-China trade conflict on its own terms. Meanwhile, the Trump administration has -- perhaps unwittingly -- exposed the dependency of US industries on China for rare-earth minerals and other inputs. The disruption to bilateral trade triggered by Mr Trump's tariffs has left US manufacturers scrambling and overpaying for materials. In implementing rare-earth export controls in early April, the Chinese government has discovered a powerful tool for inflicting pain on American businesses. Mr Trump's erratic tariff theatrics have handed the Communist Party of China (CPC) a propaganda win (though standing up to Mr Trump is not as politically popular in China as many outsiders believe) and, more importantly, a strategic advantage. For the many Global South governments that are sceptical of the Western development model, China's resilience in the face of US pressure lends credence to President Xi Jinping's claim that the world is undergoing "great changes not seen in a century". From the Chinese government's perspective, the Trump administration's determination to decouple the two economies at any cost is the culmination of American efforts to stifle China's rise. While China does not want a trade war or to decouple, it is willing to risk a trade war that the United States may lose, and it would rather decouple than kowtow to Mr Trump. That is why Chinese leaders, businesspeople, and entrepreneurs have focused on building resilience and self-reliance, which means, first and foremost, reducing dependence on US markets and technology. While nothing can compare to US consumer demand and technological innovation, Chinese firms now view their chances of competing in the US and accessing its high-tech products as close to zero, and operate accordingly. Huawei's remarkable comeback following US sanctions and restrictions is illustrative. Now ByteDance is facing similar pressure, as Mr Trump tries to force it to sell TikTok, its video-sharing app, to American buyers. Of course, Mr Trump's tariffs sting, and China's leaders know it. They could hit China's low-value-added light manufacturing -- such as apparel and footwear -- particularly hard. But shrinking exports might end up benefiting China by accelerating industrial consolidation, forcing laggards out of the game, and improving efficiency. True, unemployment could rise. But in a country where factories are already highly automated, the political fallout is likely to be muted. Perhaps more importantly, China has withstood worse. For example, market-oriented reforms and restructuring led to more than 76 million workers being laid off between 1992 and 2002. A new wave of layoffs is unlikely to shake the CPC's grip on power. The longer-term impact of Mr Trump's tariff policies is more profound. Just as the crackdown on Huawei and ZTE turbocharged China's tech ambitions, renewed geoeconomic restrictions have only made it easier for CPC leaders to rally the public against perceived foreign humiliation. The brief pause in tariffs, which merely provides exporters with a window to rush out goods rather than laying the foundation for a détente, has not changed this sentiment. Given that Mr Trump's tariff shock coincides with the final year of China's 14th Five-Year Plan, policymakers have tried to prop up domestic consumption and support small businesses with fiscal and monetary stimulus. But these measures will not fix the economy's structural flaws -- namely, the low household consumption rate. Such a rebalancing will likely take years. In the meantime, as the external environment deteriorates, the CPC leadership -- dominated by members with engineering backgrounds -- and the country's industrialists will continue to pour resources into advanced technology, especially AI-powered advanced manufacturing ecosystems, in the hopes of avoiding a productivity slump. China's high-stakes bet on developing domestic technology, first made when Mr Trump began his trade war in 2018, is not a guaranteed win. But as the US tries to back China into a corner, few see another way out. ©2025 Project Syndicate Zongyuan Zoe Liu, Senior Fellow for China Studies at the Council on Foreign Relations, is Adjunct Assistant Professor of International and Public Affairs at Columbia University's School of International and Public Affairs and the author of 'Can BRICS De-dollarize the Global Financial System?' (Cambridge University Press, 2022) and 'Sovereign Funds: How the Communist Party of China Finances Its Global Ambitions' (Harvard University Press, 2023).
The Advertiser
13-07-2025
- Politics
- The Advertiser
Australia urged to make 'gutsy' call against China war
Australia should have the guts to declare it won't go to war with China over Taiwan as the self-governing island is not among the nation's "vital interests", a former senior army officer says. The US has been pushing allies such as Australia and Japan to make clear what role they would play in a potential conflict, including a Sino-American war over the disputed territory. Washington is simultaneously reviewing its nuclear submarine deal with Australia under the three-nation AUKUS partnership over concerns the sale of America's "crown jewel" Virginia-class boats would negatively impact its military. Retired major-general Michael Smith on Sunday said Canberra needed to review AUKUS, which was inked in September 2021 under the previous Morrison government and the Biden administration. "The Australian government needs to have the guts to say we're not going to war with China over Taiwan," he told an online event hosted by the Independent and Peaceful Australia Network. "Taiwan is not one of our vital interests and we shouldn't go to war, and we won't go to war with China unless we're absolutely threatened." Defence analysts consider it unlikely the US review of AUKUS will result in the $368 billion submarine program being scrapped altogether. But it might mean demands will be made of Australia to contribute more to America's submarine industrial base. Prime Minister Anthony Albanese reaffirmed Australia wanted to see the status quo remain in place for Taiwan, which Beijing considers part of its territory, during his second trip to China since taking the top job. "We don't support any unilateral action there. We have a clear position and we've been consistent about that," he said from Shanghai. The US has joined more than a dozen nations in the latest edition of Exercise Talisman Sabre, Australia's largest military exercise, which kicked off on Sunday after an opening ceremony on the HMAS Adelaide in Sydney. More than 30,000 defence force personnel will participate. "The fact that we have 19 nations participating this year ... tells you that we're all in search of a common goal, which is stability, free and open Indo-Pacific, and adherence to international law," Chief of Joint Operations Justin Jones said. China was fully expected to want to observe the activities, as it had previously done, Vice Admiral Jones said. "We are able to adapt to that presence ... so it's catered for in the planning of the exercise," he said. The war-fighting exercise will consist of live-fire drills, air combat and maritime operations. Australia should have the guts to declare it won't go to war with China over Taiwan as the self-governing island is not among the nation's "vital interests", a former senior army officer says. The US has been pushing allies such as Australia and Japan to make clear what role they would play in a potential conflict, including a Sino-American war over the disputed territory. Washington is simultaneously reviewing its nuclear submarine deal with Australia under the three-nation AUKUS partnership over concerns the sale of America's "crown jewel" Virginia-class boats would negatively impact its military. Retired major-general Michael Smith on Sunday said Canberra needed to review AUKUS, which was inked in September 2021 under the previous Morrison government and the Biden administration. "The Australian government needs to have the guts to say we're not going to war with China over Taiwan," he told an online event hosted by the Independent and Peaceful Australia Network. "Taiwan is not one of our vital interests and we shouldn't go to war, and we won't go to war with China unless we're absolutely threatened." Defence analysts consider it unlikely the US review of AUKUS will result in the $368 billion submarine program being scrapped altogether. But it might mean demands will be made of Australia to contribute more to America's submarine industrial base. Prime Minister Anthony Albanese reaffirmed Australia wanted to see the status quo remain in place for Taiwan, which Beijing considers part of its territory, during his second trip to China since taking the top job. "We don't support any unilateral action there. We have a clear position and we've been consistent about that," he said from Shanghai. The US has joined more than a dozen nations in the latest edition of Exercise Talisman Sabre, Australia's largest military exercise, which kicked off on Sunday after an opening ceremony on the HMAS Adelaide in Sydney. More than 30,000 defence force personnel will participate. "The fact that we have 19 nations participating this year ... tells you that we're all in search of a common goal, which is stability, free and open Indo-Pacific, and adherence to international law," Chief of Joint Operations Justin Jones said. China was fully expected to want to observe the activities, as it had previously done, Vice Admiral Jones said. "We are able to adapt to that presence ... so it's catered for in the planning of the exercise," he said. The war-fighting exercise will consist of live-fire drills, air combat and maritime operations. Australia should have the guts to declare it won't go to war with China over Taiwan as the self-governing island is not among the nation's "vital interests", a former senior army officer says. The US has been pushing allies such as Australia and Japan to make clear what role they would play in a potential conflict, including a Sino-American war over the disputed territory. Washington is simultaneously reviewing its nuclear submarine deal with Australia under the three-nation AUKUS partnership over concerns the sale of America's "crown jewel" Virginia-class boats would negatively impact its military. Retired major-general Michael Smith on Sunday said Canberra needed to review AUKUS, which was inked in September 2021 under the previous Morrison government and the Biden administration. "The Australian government needs to have the guts to say we're not going to war with China over Taiwan," he told an online event hosted by the Independent and Peaceful Australia Network. "Taiwan is not one of our vital interests and we shouldn't go to war, and we won't go to war with China unless we're absolutely threatened." Defence analysts consider it unlikely the US review of AUKUS will result in the $368 billion submarine program being scrapped altogether. But it might mean demands will be made of Australia to contribute more to America's submarine industrial base. Prime Minister Anthony Albanese reaffirmed Australia wanted to see the status quo remain in place for Taiwan, which Beijing considers part of its territory, during his second trip to China since taking the top job. "We don't support any unilateral action there. We have a clear position and we've been consistent about that," he said from Shanghai. The US has joined more than a dozen nations in the latest edition of Exercise Talisman Sabre, Australia's largest military exercise, which kicked off on Sunday after an opening ceremony on the HMAS Adelaide in Sydney. More than 30,000 defence force personnel will participate. "The fact that we have 19 nations participating this year ... tells you that we're all in search of a common goal, which is stability, free and open Indo-Pacific, and adherence to international law," Chief of Joint Operations Justin Jones said. China was fully expected to want to observe the activities, as it had previously done, Vice Admiral Jones said. "We are able to adapt to that presence ... so it's catered for in the planning of the exercise," he said. The war-fighting exercise will consist of live-fire drills, air combat and maritime operations. Australia should have the guts to declare it won't go to war with China over Taiwan as the self-governing island is not among the nation's "vital interests", a former senior army officer says. The US has been pushing allies such as Australia and Japan to make clear what role they would play in a potential conflict, including a Sino-American war over the disputed territory. Washington is simultaneously reviewing its nuclear submarine deal with Australia under the three-nation AUKUS partnership over concerns the sale of America's "crown jewel" Virginia-class boats would negatively impact its military. Retired major-general Michael Smith on Sunday said Canberra needed to review AUKUS, which was inked in September 2021 under the previous Morrison government and the Biden administration. "The Australian government needs to have the guts to say we're not going to war with China over Taiwan," he told an online event hosted by the Independent and Peaceful Australia Network. "Taiwan is not one of our vital interests and we shouldn't go to war, and we won't go to war with China unless we're absolutely threatened." Defence analysts consider it unlikely the US review of AUKUS will result in the $368 billion submarine program being scrapped altogether. But it might mean demands will be made of Australia to contribute more to America's submarine industrial base. Prime Minister Anthony Albanese reaffirmed Australia wanted to see the status quo remain in place for Taiwan, which Beijing considers part of its territory, during his second trip to China since taking the top job. "We don't support any unilateral action there. We have a clear position and we've been consistent about that," he said from Shanghai. The US has joined more than a dozen nations in the latest edition of Exercise Talisman Sabre, Australia's largest military exercise, which kicked off on Sunday after an opening ceremony on the HMAS Adelaide in Sydney. More than 30,000 defence force personnel will participate. "The fact that we have 19 nations participating this year ... tells you that we're all in search of a common goal, which is stability, free and open Indo-Pacific, and adherence to international law," Chief of Joint Operations Justin Jones said. China was fully expected to want to observe the activities, as it had previously done, Vice Admiral Jones said. "We are able to adapt to that presence ... so it's catered for in the planning of the exercise," he said. The war-fighting exercise will consist of live-fire drills, air combat and maritime operations.
Perth Now
13-07-2025
- Politics
- Perth Now
Australia urged to make 'gutsy' call against China war
Australia should have the guts to declare it won't go to war with China over Taiwan as the self-governing island is not among the nation's "vital interests", a former senior army officer says. The US has been pushing allies such as Australia and Japan to make clear what role they would play in a potential conflict, including a Sino-American war over the disputed territory. Washington is simultaneously reviewing its nuclear submarine deal with Australia under the three-nation AUKUS partnership over concerns the sale of America's "crown jewel" Virginia-class boats would negatively impact its military. Retired major-general Michael Smith on Sunday said Canberra needed to review AUKUS, which was inked in September 2021 under the previous Morrison government and the Biden administration. "The Australian government needs to have the guts to say we're not going to war with China over Taiwan," he told an online event hosted by the Independent and Peaceful Australia Network. "Taiwan is not one of our vital interests and we shouldn't go to war, and we won't go to war with China unless we're absolutely threatened." Defence analysts consider it unlikely the US review of AUKUS will result in the $368 billion submarine program being scrapped altogether. But it might mean demands will be made of Australia to contribute more to America's submarine industrial base. Prime Minister Anthony Albanese reaffirmed Australia wanted to see the status quo remain in place for Taiwan, which Beijing considers part of its territory, during his second trip to China since taking the top job. "We don't support any unilateral action there. We have a clear position and we've been consistent about that," he said from Shanghai. The US has joined more than a dozen nations in the latest edition of Exercise Talisman Sabre, Australia's largest military exercise, which kicked off on Sunday after an opening ceremony on the HMAS Adelaide in Sydney. More than 30,000 defence force personnel will participate. "The fact that we have 19 nations participating this year ... tells you that we're all in search of a common goal, which is stability, free and open Indo-Pacific, and adherence to international law," Chief of Joint Operations Justin Jones said. China was fully expected to want to observe the activities, as it had previously done, Vice Admiral Jones said. "We are able to adapt to that presence ... so it's catered for in the planning of the exercise," he said. The war-fighting exercise will consist of live-fire drills, air combat and maritime operations.
Boston Globe
08-07-2025
- Business
- Boston Globe
How Harvard's ties to China helped make it a White House target
Between 2010 and 2025, Harvard attracted $560 million in gifts and contracts from China and Hong Kong, the most of any American university, partly from private donors and foundations, as well as a small amount through contracts with government entities like universities. Advertisement 'The confluence of new, enormous property wealth and especially favorable relationships' -- with China's leadership and scholars -- 'have happily converged,' wrote Harvard Magazine, a university-affiliated publication, almost breathless in describing the optimism in Sino-American relations at the time. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Now Harvard's ties with China are coming back to haunt the university. Those connections were forged when Harvard was more financially vulnerable and when much of the foreign policy establishment believed that higher education could play a part in pushing America's democratic ideals to China and the rest of the world. But U.S. foreign policy has turned sharply hawkish against China, and even though Harvard has steadily reduced its ties there, the Trump administration has made the relationship another line of attack in its broader effort to bring the university to heel. The administration has stripped away billions of dollars in federal research funding and is trying to revoke its right to host international students and also end its nonprofit tax status. Advertisement President Donald Trump has portrayed Harvard's ties to China as a national security risk. Secretary of State Marco Rubio has called for an investigation into the university's ties with a Chinese company whose leader had been subject to U.S. sanctions over its treatment of workers, which could lead to criminal charges. Alan M. Garber, the university's president, has described the administration's overall assault on the school as a power grab 'unmoored from the law, to control teaching and learning at Harvard and to dictate how it operates.' Ruling in a lawsuit that Harvard filed over the administration's efforts to block its enrollment of international students, a federal judge in Boston, Allison D. Burroughs, called the Trump administration's actions 'misplaced efforts to control a reputable academic institution and squelch diverse viewpoints, seemingly because they are in some instances, opposed to this administration's own views.' Harvard is not the only American university with a presence in China. New York University operates a degree-granting campus in Shanghai. Duke University has a campus in Kunshan. And Kean University, in New Jersey, has a campus in Wenzhou. International students comprise a quarter of Harvard's enrollment -- with 6% of students coming from China -- but, overall, the relationship has waned. Harvard officials point out that the Chinese donations are a relatively small percentage of the more than $9.6 billion the school raised from 173 countries in a global capital fundraising campaign after the recession. Since 2020, Chinese money flowing into Harvard has fallen by more than half, to $30 million in 2024 from a high of $78 million in 2020. Harvard has moved a summer language program out of Beijing to Taipei in Taiwan. Its hub for Harvard events in Shanghai, which opened in 2010 with great fanfare, has shrunk to a quarter of its previous footprint. Advertisement Michael J. Green, director of Asian affairs at the National Security Council during the George W. Bush administration, said many research universities developed China connections before paring them down as the political climate changed. 'But probably not to the satisfaction of the Trump administration,' he said, 'which is motivated by more than just national security concerns in its war with Harvard.' A Mutually Beneficial Relationship Harvard enrolled its first Chinese students in 1880. By 1908, Chinese students had formed their own club. For many families in China today, Harvard, or Hafo, as it is called there, has become a symbol of success, so much so that it has inspired copycats. William C. Kirby, a Harvard professor and former director of the university's Fairbank Center for Chinese Studies, found 375 attempts in China to register the name as a trademark -- an SUV, a child-care center, a fast-food restaurant and even a company that offers to take college exams for students. 'When we went to register our center in Shanghai in 2008, I was told by the general counsel that we couldn't use the name Harvard -- a Harvard University already existed there,' said Kirby, author of 'Empires of Ideas,' a 2022 book on universities. In 2015, Drew Faust, then the Harvard president, met in Beijing with President Xi Jinping of China, whose daughter had recently received her Harvard degree. After it began its fundraising push there, Harvard brought in donations from executives of major real estate companies. Advertisement Some had close connections to the Chinese Communist Party, often a prerequisite for success for Chinese businesses. They included Wang Jianlin, the head of Dalian Wanda Group, who had been a longtime Communist Party member; Hui Ka Yan, the founder of China Evergrande, who rubbed shoulders with officials in the highest levels of government; and Xiao Jianhua, the founder of China's Tomorrow Group, who served as a de facto banker to China's Communist Party elite. An American foundation controlled by Ronnie and Gerald Chan, American citizens who made billions in Hong Kong real estate, also donated. It gave $350 million, at the time Harvard's largest gift ever. Orville Schell, a Harvard alumnus who directs the Asia Society's Center on U.S.-China Relations, said that China was then regarded as a new landscape of potential big donors. 'Everybody made a China play,' Schell said. In 2002, Harvard's Kennedy School began the program known as China's Leaders in Development, which continued until 2016, training Chinese government officials, some who went on to high-ranking roles in the Chinese Communist Party. The school emphasized what Harvard called 'values of freedom, democracy and human rights' in hopes of exposing a new generation of leaders to democratic values. 'No one thought that was craven,' Schell said. 'The idea was that, if we interact more, things will change more, and maybe China will slowly vacate its old Leninist past.' In retrospect, he said, it is clear that strategy failed. In a statement, the Kennedy School said it ended ties with China years ago, including the program for training Chinese civil servants. Advertisement 'As the Chinese government became more internally repressive and externally assertive,' a spokesperson for the Kennedy School said, 'the school has discontinued those relationships.' Perry Link, a Harvard alumnus and China scholar, said that American universities had sought to exchange academic ideas but also to raise money and attract wealthy and well-connected students. And China welcomed the arrangements, he added. 'The Communist Party's interest has been to catch up with the West in science in order to be as strong and wealthy as the West,' said Link, who was barred by China after assisting a Chinese dissident's escape from the country. A Deepening Distrust As the U.S.-China relationship deteriorated, some politicians, mostly Republicans, expressed concern about Chinese influence in academia -- and pointed out vulnerabilities with Harvard's ties. In 2020, Trump began an investigation into whether Harvard had properly disclosed its Chinese donors. Harvard's full list of Chinese donors and contracts is not public, but the university has said that its contracts primarily involve executive education programs and the sale and licensing of academic publications and materials produced by Harvard's two presses. As a result of the 2020 investigation, Harvard made additional disclosures and the Biden administration closed the investigation. The Trump administration opened a new investigation this year. Then in May, House Republicans sent a letter to the university demanding documents related to a large Chinese state-owned agricultural enterprise called Xinjiang Production and Construction Corps, or XPCC, which is subject to U.S. sanctions for its treatment of Uyghur workers. The Department of Homeland Security followed with a letter claiming Harvard 'hosted and trained' representatives of the company at conferences in China sponsored by Harvard's T.H. Chan School of Public Health -- named for the Chan family. Rubio followed with the call for a sanctions investigation. Advertisement A Harvard spokesperson declined to comment. Several administrations in Washington have raised concerns about academic collaborations and accused China of trying to steal scientific secrets. In the past year, both Georgia Tech and the University of California, Berkeley, announced that they are severing ties. In 2023, a Harvard scientist was convicted of lying about a deal with China to establish a research laboratory there. (No evidence emerged suggesting that Harvard was aware of the arrangement.) The researcher, Charles M. Lieber, the former chair of the university's chemistry department, served a brief prison sentence. He is now on the faculty of Tsinghua University. At times, critics have accused Harvard of currying favor with actors in an increasingly authoritarian state. A survey published in 2020 by the Ash Center at the Kennedy School drew criticism from Mike Pompeo, secretary of state in the first Trump administration, after the Chinese government touted it as evidence that 90% of citizens were satisfied with their central government. A spokesperson for Harvard's Kennedy School said that, contrary to the Chinese government's messaging, the study found that Chinese residents held nuanced views about their government. An author of the study, Tony Saich, a Harvard professor of international affairs, is on the board of AMC Entertainment. The company had been controlled by Wanda Group, a Chinese conglomerate that sold its controlling interest. Saich's compensation from AMC last year was more than $300,000, according to the company's report. Saich said he became familiar with Wanda Group as a result of his appointment to the AMC board in 2012, adding that he learned about the donation after the fact. Wanda is controlled by Wang, who was once viewed as the richest man in China and whose American acquisitions once raised concern on Capitol Hill. In 2015, Faust met with Wang in Beijing, according to an announcement on the company's website. The university subsequently announced a gift of $3.75 million from Wang to create a global institute focused on climate change. Over time, Wang donated more money. In 2015, The New York Times disclosed his company's ties to relatives of Xi, whom he would later defend in a presentation at Harvard. His business and influence, like those of several Chinese donors, has declined, however. Evergrande, whose founder, Hui Ka Yan, was a donor, filed for bankruptcy. The company reneged on its most recent pledge to Harvard, paying only a portion of a $115 million COVID-19 research project. Xiao, the founder of China's Tomorrow Group, fell out of favor with China's leadership and is serving a 13-year jail term for financial fraud. In the fallout from Trump's attacks on Harvard, the Chan School of Public Health, which receives close to 46% of its budget in federal grants and contracts, and the Kennedy School have announced budget cuts. Citing 'unprecedented new headwinds,' the Kennedy School's dean said last week that it would be forced to lay off employees. This article originally appeared in .
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Business Standard
05-07-2025
- Business
- Business Standard
Mines, magnets and Mao: How China built its global rare earth dominance
Rare earth metals were an afterthought for most world leaders until China temporarily suspended most exports of them a couple of months ago. But for almost half a century, they have received attention from the very top of the Chinese government. During his 27-year rule in China, Mao Zedong focused often on increasing how much iron and steel China produced, but seldom on its quality. The result was high production of weak iron and steel that could not meet the needs of the industry. In the late 1940s, metallurgists in Britain and the United States had developed a fairly low-tech way to improve the quality of ductile iron, which is widely used for pipelines, car parts and other applications. The secret? Add a dash of the rare earth cerium to the metal while it is still molten. It was one of the early industrial uses of rare earths. And unlike most kinds of rare earths, cerium was fairly easy to chemically separate from ore. When Deng Xiaoping emerged as China's paramount leader in 1978, he moved quickly to fix the country's iron and steel industry. Deng named a top technocrat, Fang Yi, as a vice premier and also as the director of the powerful State Science and Technology Commission. Fang immediately took top geologists and scientists to Baotou, a city in China's Inner Mongolia that had vast steel mills and the country's largest iron ore mine nearby. Baotou had already made much of the iron and steel for China's tanks and artillery under Mao, but Fang's team made an important decision to extract more than iron from the mine. The city's iron ore deposit was laced with large quantities of so-called light rare earths. These included not just cerium, for ductile iron and for glass manufacturing, but also lanthanum, used in refining oil. The iron ore deposit also held medium rare earths, like samarium. The United States had started using samarium in the 1970s to make the heat-resistant magnets needed for electric motors inside supersonic fighter jets and missiles. 'Rare earths have important application value in steel, ductile iron, glass and ceramics, military industry, electronics and new materials,' Fang declared during his visit to Baotou in 1978, according to an exhibit at the city's museum. At the time, Sino-American relations were improving. Soon after his Baotou visit, Fang took top Chinese engineers to visit America's most advanced factories, including Lockheed Martin and McDonnell Douglas assembly plants near Los Angeles. Rare earth metals are tightly bound together in nature. Prying them apart, particularly the heavier rare earths, requires many rounds of chemical processes and huge quantities of acid. During the 1950s and 1960s, the United States and the Soviet Union had each developed similar ways to separate rare earths. But their techniques were costly, requiring stainless steel vats and piping as well as expensive nitric acid. China ordered government research institutes to devise a cheaper approach, said Constantine Karayannopoulos, a chemical engineer and former chief executive of several of the largest North American rare earth companies. The Chinese engineers figured out how to separate rare earths using inexpensive plastic and hydrochloric acid instead. The cost advantage, together with weak enforcement of environmental standards, allowed China's rare earth refineries to undercut competitors in the West. Facing increasingly stiff environmental regulations, almost all of the West's refineries closed. Separately, China's geologists discovered that their country held nearly half the world's deposits of rare earths, including rich deposits of heavy rare earths in south-central China, valuable for magnets in cars as well as for medical imaging and other applications. In the 1990s and 2000s, Chinese refinery engineers mastered the task of prying apart heavy rare earths. That gave China an almost total monopoly on heavy rare earth production. 'The Middle East has oil,' Deng said in 1992. 'China has rare earths.' By then, he and Fang had already trained the next leader to guide the country's rare earth industry: a geologist named Wen Jiabao. He had earned a master's degree in rare earth sciences in the late 1960s at the Beijing Institute of Geology, when most of the rest of China was paralyzed during the upheaval of the Cultural Revolution. Wen went on to become a vice premier in 1998 and then China's premier from 2003 to 2013. During a visit to Europe in 2010, he declared that little happened on rare earth policy in China without his personal involvement.
