Hardly a day goes by without Donald Trump receiving bad news from Beijing. Despite all the American sanctions, China continues to close the gap with the United States in most strategic areas. Not least in the most important of all: artificial intelligence and new technology.
The superpower that wins this race will also win the economic and military duel. It must therefore be all the more frustrating for Trump to see China making new and remarkable advances almost every week. Stanford University in the United States concludes in a recent report that America’s lead over China in AI has almost disappeared. But the race will not be decided solely by who develops the most advanced models. Being able to roll out the technology faster and more cheaply is just as important, and here China is in the lead.
Trump is now considering banning several Chinese AI models. At the same time, he is expanding US sanctions against Chinese companies producing semiconductors and other sensitive technologies. Nor does he intend to approve China’s latest humanoid and quadrupedal robots.
Trump’s countermeasures also include a general increase in tariffs on Chinese imports, from 10 to 12.5 percent. Many Chinese products are also subject to additional tariffs, meaning that the overall tariff burden can in practice be considerably higher. China has responded by restricting US access to Chinese drone technology. The government in Beijing has also placed several American companies on its sanctions list. This means that Chinese companies and individuals are barred from doing business with them.
The new measures come just weeks before Chinese President Xi Jinping is due to arrive in Washington. As recently as May, an ill-prepared Trump made a two-day visit to Beijing. They parted with friendly smiles and solemn assurances that they would reduce tensions. But beneath the polite surface, an intense and persistent struggle is underway over who will dominate the world of the future.
While China has proved surprisingly resilient, the United States is in the midst of a deep political crisis that will last through Trump’s second term — and quite possibly beyond. The self-proclaimed genius in the White House simply has no foreign policy and is evidently living in a world of impulses and outbursts.
In these murky waters, China’s leaders are navigating as cautiously as they can. They know there will be a time after Trump, and therefore weigh every word with great care. At the same time, they are trying to portray China as measured, stable and “responsible” in a turbulent world.
It has produced results. Earlier this year, the American Pew Research Center interviewed more than 42,000 people in 36 countries. In 25 of those countries, more people had a positive view of China than of the United States. Even in European countries such as Germany, France, Britain, Spain and Italy, China came out on top. In Canada — the country Trump wants to swallow whole — 44 percent had a positive view of China, compared with 33 percent for the United States. Norway was not included in the survey.
The figures primarily show that more and more people are losing faith in Trump’s America, not that they support China’s totalitarian political system. Nevertheless, the shift must be described as historic. For twenty years, Pew’s surveys showed that the United States was viewed more positively than China. Now the curves have crossed. That is serious for Washington because military and economic power alone are not enough. The United States also depends on trust, alliances and the perception that it represents an attractive model of society.
For China, the Pew survey must be a powerful boost. For decades, the Chinese propaganda apparatus has spent billions trying to improve the country’s reputation, with limited success. But now the country is receiving one gift after another from the president of the United States. For Xi, it must be tempting simply to sit back and watch America destroy itself. But that is not what he is doing. Instead, he is taking small steps that, taken together, could shift the global balance of power.
Since becoming head of the Communist Party 14 years ago, Xi has acted with steadily greater authority. His self-confidence can hardly have diminished in light of recent events. His criticism of Trump’s foreign policy comes across largely as paternal admonishment. At the same time, he takes every opportunity to promote China’s example in other countries, particularly in the rest of Asia, Africa and Latin America. As he said in a speech the other day: “We offer Chinese wisdom, Chinese solutions and Chinese strength to solve the major problems facing humanity.”
China has for years been the great bogeyman in Trump’s political universe. During his first presidential campaign, in 2016, he claimed that the country had stolen “millions” of industrial jobs from the United States. “I’m going to get them back!” He also promised to rectify America’s huge trade deficit with China.
Both tasks have proved difficult.
When Trump was inaugurated as president in January 2017, the United States had roughly 12.33 million industrial jobs. Last month, the number was 12.61 million — a modest increase. Most major American companies that have scaled back their operations in China have moved production to third countries, primarily elsewhere in Asia and to Mexico.
Trump gets a plus for managing to reduce the trade deficit. Xi, however, can take comfort from the fact that China’s exports to countries other than the United States are larger than ever. In just the first six months of this year, exports to the rest of the world increased by 13.4 percent compared with the same period last year. Most of the increase was driven by shipments to China’s Asian neighbors and — hold on to your hats — to the EU. In Brussels, the despair is palpable.
In its duel with the United States, China can draw on its strong dominance in the mining, separation and refining of rare earth elements. The country also produces 94 percent of the powerful magnets used in electric vehicles, drones, weapons systems and much more. Unfortunately, Western countries will need ten to fifteen years to develop their own production capacity. The rest is self-evident: Whenever Trump or other adversaries become too obstinate, China can punish them by delaying, reducing or completely halting essential supplies.
For now, the Bayan Obo mine in Inner Mongolia is the largest in both China and the world. Just two weeks ago, Chinese geologists announced that the mine could contain significantly greater resources than previously thought. Officially, its reserves amount to roughly 100 million tonnes of rare earth elements, but recent surveys suggest that the deposit could be far more extensive. At the same time, Chinese state-owned companies continue to develop new commercially viable deposits.
It is perfectly legitimate to be worried.