US “blunt force trauma” trade strategy treated with Chinese acupuncture

Jan 24, 2025
Katana versus revolver.

At this time it seems impossible to avoid discussing President Trump and his approach to China. What is less often discussed is China’s approach to Trump.

Trump’s negotiating style is predictable, although it is often clothed in outlandish claims, such as taking over Greenland or Canada. The objective in this style of approach is to move the middle point in his favour.

It’s similar to the restaurant menu strategy which starts with outrageously priced entrees which make the (still expensive) main course offering look cheap in comparison. In marketing its called anchoring. Trump heaves the ‘anchor’ a great distance, so the subsequent compromise seems to be reasonable even though it is well removed from the previous mid-point.

The specifics of Trump’s China policies are yet to be announced. China has had time to prepare for increased tariffs, by building up trade relationships with small economies and moving supply chains to third countries.

But that’s not the main game.

The United States (US) has already diversified its imports away from China for low value-added goods such as bedding, mattresses, and furniture. But diversification is proving far harder for higher value-added goods. This makes the China-US relationship far more fragile because there are significant vulnerable pinch points in the relationship.

Chinese acupuncture uses tiny needles inserted at the correct meridian points to impact on the health of the body and restore circulation. The acupuncture points are used to restore balance and encourage the body to heal itself. The Chinese response to Trump’s belligerence is designed to restore balance and help improve the health of the trade relationship by selecting those trade points which will have the largest, if silent, impact.

Or, as President Xi noted “all things are interconnected and interdependent,” so “pulling one hair moves the whole body.”

Two examples illustrate the acupuncture trade response strategy.

Late in 2024, China announced an immediate ban on exports of gallium, germanium, and antimony to the US. Unlike lithium, few had heard of these minerals outside of the semi-conductor industry. These are amongst the rarest of rare earths. China dominates the global mining and refining of those minerals. The US depends on imports from China for 54% of its germanium and gallium consumption and 63% of its antimony consumption.

The decision also enforced stricter reviews of graphite commodities shipped to the US. China produces the majority of the world’s graphite. The US is completely reliant on imports for graphite

Gallium and germanium are crucial for the manufacturing of advanced technologies such as semiconductors, with germanium also critical for infrared technology, fibre optic cables, solar cells, and space exploration. Antimony is used in bullets and other weaponry, while graphite constitutes the largest component in electric vehicle batteries.

Another pinch point is medicine. The United States imports most of its medicines from other countries. China is the fourth largest supplier of medicines to the US. The suspension of these supplies would immediately disrupt the US health system.

These actions have been called a tit-for-tat response in reply to US tariffs and sanctions, but that analysis fails to understand the carefully designed response that has far wider impacts.

The Chinese acupuncture strategy is pitted against the blunt force trauma strategy favoured by President Trump and his China hawks. It may be that the US can replace these supply factors, but it will take time, which allows China to forge even further ahead in these critical digital areas.

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