WEBVTT - Xi’s Top Bargaining Chip Is a Trade War Game Changer 0:00:00.240 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.119 --> 0:00:11.880 I have a great relationship with Presidency. I expect to 0:00:11.880 --> 0:00:14.960 be able to make a good deal with him, and 0:00:15.000 --> 0:00:16.439 he'll make a good I want him to make a 0:00:16.440 --> 0:00:18.800 good deal for China, but it's got to be fair. 0:00:19.239 --> 0:00:22.600 Ahead of a high stakes meeting with Chinese President Shijenping 0:00:22.720 --> 0:00:26.000 next week, US President Donald Trump said he looks forward 0:00:26.040 --> 0:00:27.120 to making a trade deal. 0:00:27.440 --> 0:00:29.520 Certainly, there are a lot of people that are waiting 0:00:29.560 --> 0:00:32.280 for it, and maybe it won't happen. Maybe it won't happen. 0:00:32.400 --> 0:00:37.480 Things can happen where for instance, maybe somebody will say 0:00:37.560 --> 0:00:40.040 I don't want to meet it's too nasty, but it's 0:00:40.080 --> 0:00:41.800 really not nasty. It's just business. 0:00:42.520 --> 0:00:45.199 If the meeting on the sidelines of the annual Apex 0:00:45.240 --> 0:00:48.360 summit goes as planned, it would be Trump and She's 0:00:48.479 --> 0:00:52.680 first in person conversation since Trump began his second term 0:00:53.000 --> 0:00:56.800 and launched a trade war that's upended the relationship between 0:00:56.840 --> 0:00:58.760 the world's two largest economies. 0:01:00.040 --> 0:01:03.200 U US went from negligible tariffs on China to ten percent, 0:01:03.520 --> 0:01:05.959 then twenty, then fifty four, then one oh four, then 0:01:05.959 --> 0:01:06.840 one forty five. 0:01:07.319 --> 0:01:10.559 There's no shortage of sticking points in a potential trade 0:01:10.600 --> 0:01:14.120 deal between the US and China, but Bloomberg's Daniel ten Kate, 0:01:14.360 --> 0:01:18.000 Executive editor of Government and Economics in Asia, says he's 0:01:18.040 --> 0:01:21.880 watching one critical element of these negotiations closely. 0:01:23.200 --> 0:01:27.640 As long as China agrees not to really disrupt the 0:01:27.640 --> 0:01:31.679 flow of rareth magnets, then you could see that they 0:01:31.720 --> 0:01:34.880 could come to some sort of agreement where they extend 0:01:34.959 --> 0:01:36.399 this tentative truce. 0:01:37.080 --> 0:01:40.480 When China announced sweeping new controls on its exports of 0:01:40.600 --> 0:01:44.760 rare earth's earlier this month, Treasury Secretary Scott Bessentt accused 0:01:44.840 --> 0:01:48.320 Beijing of pointing a bazooka at the global supply chain. 0:01:49.000 --> 0:01:52.280 Trump threatened to call off talks the sheet altogether and 0:01:52.400 --> 0:01:56.240 add an additional one hundred percent tariff on China, but 0:01:56.360 --> 0:01:59.480 within forty eight hours Trump had backed off. 0:02:00.000 --> 0:02:02.800 I want them to play the rare earth game with US, and. 0:02:02.720 --> 0:02:06.280 On Monday, the President signed a landmark deal with Australia 0:02:06.480 --> 0:02:09.639 to boost the supplies of rare earth as a strategic 0:02:09.760 --> 0:02:12.840 counter to China. The deal outlines eight and a half 0:02:12.919 --> 0:02:16.760 billion dollars worth of projects, with both nations initially committee 0:02:16.960 --> 0:02:19.280 one billion dollars over the next six. 0:02:19.440 --> 0:02:21.760 In about a year from now, we'll have so much 0:02:21.800 --> 0:02:24.960 critical mineral and rarer so that you won't know what 0:02:25.040 --> 0:02:25.560 to do with him. 0:02:26.160 --> 0:02:29.680 His retreat was proof that the rare Earth's bazooka is 0:02:29.720 --> 0:02:33.160 a weapon to be reckoned with and gives China serious 0:02:33.280 --> 0:02:35.560 leverage in this trade war with the US. 0:02:35.919 --> 0:02:39.680 Trump took his biggest swing at China and he was 0:02:39.680 --> 0:02:42.920 forced to back down. And for Shijimping, that was a 0:02:42.919 --> 0:02:45.480 big political win. He was the only leader in the 0:02:45.480 --> 0:02:49.320 world who had enough ammunition to be able to force 0:02:50.000 --> 0:02:52.600 the Americans to back down. It is a game changer, 0:02:52.639 --> 0:02:55.560 and I think the US and China are both coming 0:02:55.600 --> 0:02:58.840 to terms with this. You see the US realizing that 0:02:58.919 --> 0:03:01.400 all of a sudden, China is these rights and China's 0:03:01.400 --> 0:03:07.600 put the US on the back foot a little bit. Here. 0:03:13.760 --> 0:03:17.000 This is the Big Take Asia from Bloomberg News. I'm Wanha. 0:03:17.800 --> 0:03:20.080 Every week we take you inside some of the world's 0:03:20.080 --> 0:03:24.080 biggest and most powerful economies and the markets, tycoons and 0:03:24.280 --> 0:03:28.880 businesses that drive this ever shifting region. Today on the show, 0:03:29.160 --> 0:03:32.960 China has dominated the rare Earth's world for decades, but 0:03:33.040 --> 0:03:35.760 it's only now begun to make the most of that influence. 0:03:36.360 --> 0:03:39.480 We'll look at how it's using American trade tactics to 0:03:39.560 --> 0:03:43.320 press its rare earth's advantage and explore what weapons the 0:03:43.400 --> 0:03:52.720 US has in its arsenal. To fight back, China introduced 0:03:52.760 --> 0:03:55.360 new rules this month, the clamp down on the supply 0:03:55.560 --> 0:03:58.720 and use of rare earths. Bloomberg's Dantan Kate says the 0:03:58.800 --> 0:04:02.040 curbs go much further there then previous restrictions. 0:04:02.760 --> 0:04:06.640 If any product contains even a trace amount of rare earth, 0:04:07.280 --> 0:04:12.760 then China has the right to restrict that product. So 0:04:13.240 --> 0:04:15.880 if you have zero point one percent of rarest to 0:04:16.000 --> 0:04:19.000 make any given product in the world, you need a 0:04:19.080 --> 0:04:23.880 license and permission from China. Previous actions China cut off 0:04:24.160 --> 0:04:27.560 supplies of rare earth to various companies. So if you 0:04:27.680 --> 0:04:31.679 needed rare earth to make an electric vehicle, for instance, 0:04:31.720 --> 0:04:34.960 and you bought that from China, China was saying, you 0:04:35.040 --> 0:04:38.400 need a license to get these rare earths, whereas before 0:04:38.440 --> 0:04:41.920 you could freely buy them. Now, what China has done 0:04:42.080 --> 0:04:46.080 is they're not just stopping the rare earth from getting 0:04:46.160 --> 0:04:49.800 to those factories, but they're saying, even if you use 0:04:49.839 --> 0:04:52.359 those rarest to make that car, if you want to 0:04:52.400 --> 0:04:55.160 sell that car to another country, you're also going to 0:04:55.240 --> 0:05:00.240 need permission now that just seems completely unworkable in reality, 0:05:00.240 --> 0:05:03.360 and that's what raises questions about, Okay, are they going 0:05:03.480 --> 0:05:08.040 to put a stop to global trade. No, that's not 0:05:08.080 --> 0:05:11.800 in China's interest at all, but they are asserting the 0:05:11.880 --> 0:05:14.160 right to effectively intervene whenever they want. 0:05:15.680 --> 0:05:18.119 The rules are set to take effect later this year, 0:05:18.480 --> 0:05:21.839 and while it's unclear how Beijing plans to enforce them, 0:05:22.080 --> 0:05:25.600 Dan says the move shows just how powerful a weapon 0:05:26.040 --> 0:05:28.000 rare earths can be for China. 0:05:28.120 --> 0:05:30.760 They control a lot of the supply, somewhere in the 0:05:30.880 --> 0:05:34.719 neighborhood of about seventy percent of that. But what China's 0:05:34.760 --> 0:05:37.800 real advantage is that they can process the rare eer. 0:05:38.000 --> 0:05:40.039 So once you take the rare eers out of the ground, 0:05:40.120 --> 0:05:43.080 you still need to ship them to somewhere where they 0:05:43.080 --> 0:05:46.320 can be processed into a material that can then be 0:05:46.360 --> 0:05:48.200 sent to a factory that can be used to make 0:05:48.240 --> 0:05:50.479 a phone or make a TV or something like that. 0:05:50.960 --> 0:05:55.720 And China controls nearly all of that technology now. The 0:05:55.839 --> 0:05:58.840 US used to be the world's largest producer of wearers, 0:05:59.240 --> 0:06:02.880 and they let that atrophy and disappear to China back 0:06:02.920 --> 0:06:07.719 in the eighties and nineties. So the issue is now 0:06:07.760 --> 0:06:12.200 that the amount of rarer supply that includes no Chinese 0:06:12.200 --> 0:06:19.440 minerals or any processing by Chinese technology using Chinese technology 0:06:19.960 --> 0:06:21.640 is very small, and is. 0:06:21.560 --> 0:06:26.279 It viable then for the world to somehow very quickly 0:06:26.360 --> 0:06:31.400 establish another supply chain for wearers that doesn't rely on China. 0:06:31.520 --> 0:06:34.320 It depends on who you talk to there. Again, I 0:06:34.320 --> 0:06:37.520 mean Trump will say in a year, will be okay, 0:06:37.640 --> 0:06:41.160 We'll have enough supplies, We'll be able to get the 0:06:41.200 --> 0:06:43.480 processing up and running. In the US is doing I 0:06:43.560 --> 0:06:47.800 mean the Pentagon has taken a steak MP Materials, which 0:06:47.839 --> 0:06:51.520 owned the largest rarest mind in the US, which is 0:06:51.560 --> 0:06:55.600 based in California. We've also seen the US government taking 0:06:55.640 --> 0:06:59.760 equity stakes in some Australian producers. You have Australia pitching 0:06:59.760 --> 0:07:04.280 ITSLF as the savior in this regard. But the problem 0:07:04.520 --> 0:07:06.520 there is that if you talk to certain people in 0:07:06.560 --> 0:07:11.680 the industry, they say, actually getting the technologies up to 0:07:11.760 --> 0:07:14.760 process these heavy rare earths is not that easy. It 0:07:14.800 --> 0:07:17.000 actually takes a lot of time to come up with 0:07:17.120 --> 0:07:20.440 and you're starting from scratch almost because you've lost some 0:07:20.600 --> 0:07:23.640 of the materials to do that. The issue also is 0:07:23.680 --> 0:07:27.600 that even if you have a country like Malaysia processing 0:07:27.640 --> 0:07:31.080 a lot of rare earth, if they're using Chinese equipment, 0:07:31.760 --> 0:07:35.080 then China can also block those wearers from going to 0:07:35.160 --> 0:07:38.160 the US. So the amount of the rare earth's supply 0:07:38.280 --> 0:07:42.880 chain globally that doesn't just include minerals from China, but 0:07:43.040 --> 0:07:46.880 also doesn't rely on Chinese technology to process those minerals, 0:07:47.440 --> 0:07:51.800 that is very small, and that is the fundamental issue. 0:07:51.800 --> 0:07:57.440 Now, China has spent years cultivating its rare earth industry. 0:07:57.960 --> 0:08:01.760 Today it dominates the market as a producer and refiner 0:08:01.920 --> 0:08:05.520 of these vital minerals, but it's only recently been trumping 0:08:05.600 --> 0:08:08.320 the rare earth card in trade negotiations. 0:08:08.680 --> 0:08:11.440 If you look in the nineteen eighties, China's known that 0:08:11.520 --> 0:08:14.720 it has where dung Jopping at one point said the 0:08:14.720 --> 0:08:17.920 Middle East has oil, China has rare earth. So they 0:08:17.960 --> 0:08:22.480 started processing really once China emerged from the mal years 0:08:22.520 --> 0:08:25.520 and they started opening up the country, rare earth was 0:08:25.520 --> 0:08:28.400 one of the first industries that they really started to develop, 0:08:28.560 --> 0:08:31.880 and you saw a lot of the rarest production moving 0:08:32.040 --> 0:08:35.360 from the US and other places to China in the 0:08:35.440 --> 0:08:39.600 nineties and by the two thousands, they've had a very 0:08:39.600 --> 0:08:43.280 firm grip on the supply almost ninety ninety five percent. 0:08:44.000 --> 0:08:47.400 Things really came to a head in twenty ten when 0:08:47.440 --> 0:08:50.920 there was a territorial dispute with Japan, and China cut 0:08:50.920 --> 0:08:55.200 off rare earth then, and that really spooked Japan, and 0:08:55.240 --> 0:09:00.559 the world really had known that, Okay, we can't rely 0:09:00.720 --> 0:09:04.280 on China anymore for supplies of rare earth. China can 0:09:04.400 --> 0:09:07.800 just flip a switch, cut us off, and then suddenly 0:09:07.840 --> 0:09:10.280 we don't have the building blocks we need to produce 0:09:10.320 --> 0:09:13.480 a lot of the technology and products that are used 0:09:13.520 --> 0:09:17.520 in the modern economy. But even after that, we're still 0:09:17.559 --> 0:09:20.920 here fifteen years later, and China still has a stranglehold 0:09:20.960 --> 0:09:21.680 on the world supply. 0:09:23.440 --> 0:09:26.880 Rare earths have been central to negotiations between the US 0:09:26.960 --> 0:09:31.120 and China since Trump relaunched his trade war earlier this year. 0:09:31.640 --> 0:09:34.360 When Trump imposed tariffs of more than one hundred percent 0:09:34.480 --> 0:09:37.920 back in April, she cut off crucial rare earth supplies 0:09:37.960 --> 0:09:40.840 to the US. The resumption of rare earth shipments was 0:09:40.880 --> 0:09:43.680 top of Trump's wish list during trade talks with China 0:09:43.720 --> 0:09:46.760 in June. It was also a key component of the 0:09:46.800 --> 0:09:50.240 trade truce between the two countries that's set to expire 0:09:50.320 --> 0:09:50.800 next month. 0:09:51.280 --> 0:09:54.880 The fundamental part of the truce is that the tariffs 0:09:54.960 --> 0:09:59.280 go down to round fifty five percent, and in return, 0:09:59.480 --> 0:10:02.720 the US gets enough rare earth magnets that it needs 0:10:03.080 --> 0:10:06.760 to function to keep its factories open. The issue is 0:10:06.800 --> 0:10:10.480 that China really wants the US to stop putting any 0:10:10.559 --> 0:10:14.040 other measures on. China saw the deal as we want 0:10:14.080 --> 0:10:18.080 no more export controls, we want no more punitive actions 0:10:18.080 --> 0:10:22.720 against Chinese companies. So they saw the Commerce Department in 0:10:22.760 --> 0:10:25.720 particular doing that and the Hawks of the United States 0:10:25.720 --> 0:10:29.880 continuing to press ahead with that, and they basically just said, 0:10:30.040 --> 0:10:31.679 we need to put a stop to this, and we're 0:10:31.679 --> 0:10:35.920 going to take this opportunity to put this really big 0:10:35.960 --> 0:10:36.760 measure in place. 0:10:37.440 --> 0:10:41.520 China's latest moves pressing its advantage with rare earths were 0:10:41.559 --> 0:10:45.319 met with outrage in the White House, but their tactics 0:10:45.400 --> 0:10:49.000 taken directly from America's own manual on how to wager 0:10:49.120 --> 0:10:54.960 trade war. After the break, well, look at how China 0:10:55.080 --> 0:10:58.200 is trying to beat America at its own game and 0:10:58.200 --> 0:11:14.120 how the US is retaliating. During Donald Trump's first term 0:11:14.160 --> 0:11:18.240 in office, he dropped the hammer on China, blacklisting Chinese 0:11:18.280 --> 0:11:22.079 telecom giants and cutting the country off from critical US 0:11:22.160 --> 0:11:24.960 chips and software. Of course, Huawei not the only one 0:11:25.040 --> 0:11:28.560 affected by these decisions are the blast radius in terms 0:11:28.559 --> 0:11:32.880 of Huawei supplies pretty well. Overnight, Huawei, China's crown jewel 0:11:32.920 --> 0:11:35.600 in tech and the world's biggest maker of telecom gear, 0:11:35.920 --> 0:11:40.160 found itself scrambling, and so did Beijing. For all its 0:11:40.200 --> 0:11:43.880 economic muscle, China had no real way to strike back. 0:11:44.440 --> 0:11:47.640 Bloomberg's Dan ten Kate says that moment was a wake 0:11:47.720 --> 0:11:51.040 up call for Chinese present Shi Jinping to look at 0:11:51.080 --> 0:11:54.120 how the US used the law to shape export rules 0:11:54.240 --> 0:11:58.160 and control global trade and copy that playbook. 0:11:58.600 --> 0:12:02.040 The US basically owed China the way for doing all 0:12:02.080 --> 0:12:05.760 of these things. And so what you saw was after 0:12:05.800 --> 0:12:09.840 Trump's first term, Xijinping went out and he got those tools, 0:12:10.360 --> 0:12:13.200 and in twenty twenty they passed an export control law 0:12:13.760 --> 0:12:16.840 that gave them the ability to do everything that the 0:12:16.920 --> 0:12:19.679 US was currently doing to them. And if you look 0:12:19.720 --> 0:12:23.679 at the current rule, this rule that okay, if there 0:12:23.720 --> 0:12:26.160 is even a trace amount of errors, we can control 0:12:26.240 --> 0:12:29.920 everything that comes directly from something called the foreign Direct 0:12:29.920 --> 0:12:33.560 Product rule, which the US passed that in nineteen fifty nine. 0:12:35.679 --> 0:12:39.960 The Foreign Direct Product Rule, it allows the US to 0:12:40.000 --> 0:12:43.120 ban the sale of products to foreign firms if any 0:12:43.200 --> 0:12:46.880 part of a product is made with American intellectual property. 0:12:47.440 --> 0:12:50.720 Over the years, the US would implement that against China. 0:12:51.240 --> 0:12:54.959 So there was an exchange one in particular where Walter Mondale, 0:12:55.040 --> 0:12:57.080 the Vice president of the time, went to China and 0:12:57.080 --> 0:13:00.840 he spoke with Donghaoping in nineteen seventy, and a lot 0:13:00.880 --> 0:13:04.920 of that conversation was around, okay, what can you sell us, 0:13:05.160 --> 0:13:09.480 and Dung at one point expressed frustration. He said, the 0:13:09.600 --> 0:13:12.680 Japanese and the Europeans won't even sell us a product 0:13:12.760 --> 0:13:16.480 because it as an American component. And that principle is 0:13:16.559 --> 0:13:19.760 essentially what China's doing today. If you have a bit 0:13:19.800 --> 0:13:24.839 of wearers that's been manufactured through our processes, then we 0:13:24.960 --> 0:13:27.600 assert the right to be able to control that. And 0:13:27.880 --> 0:13:33.960 China's ultimate goal here is not necessarily to restrict trade 0:13:34.000 --> 0:13:37.400 and try and shut down the global supply chains. It 0:13:37.520 --> 0:13:41.600 certainly doesn't have the capability to enforce that at all, 0:13:42.160 --> 0:13:45.760 but it does want the same tools as the US, 0:13:45.800 --> 0:13:48.800 and it wants to show the world that, hey, we 0:13:48.920 --> 0:13:52.240 can mess with you any time we want. We can 0:13:52.440 --> 0:13:55.800 assert the right to come in and block you from 0:13:55.840 --> 0:13:56.440 doing things. 0:14:00.400 --> 0:14:03.160 Dan says, the US still has plenty of weapons of 0:14:03.200 --> 0:14:06.400 its own, and China isn't in a good position to 0:14:06.480 --> 0:14:10.080 fight off a sustained attack on trade. It's struggling with 0:14:10.200 --> 0:14:15.319 manufacturing overcapacity, a slump in consumer spending, and an AILNK 0:14:15.360 --> 0:14:19.360 property sector. Dan says it's not that America's trade measures 0:14:19.400 --> 0:14:23.320 wouldn't be highly effective against China, it's that using them 0:14:23.440 --> 0:14:25.440 could be risky to the US. 0:14:26.200 --> 0:14:30.160 The US has a lot in its arsenal. The question 0:14:30.320 --> 0:14:33.000 is what measures can the US put in place that 0:14:33.080 --> 0:14:38.760 won't blow back on America, and that looks limited to 0:14:38.960 --> 0:14:44.960 things like airplane parts, chip design, software, ethane, and a 0:14:44.960 --> 0:14:49.640 few other things that China needs that the US has now. 0:14:49.840 --> 0:14:52.840 The other big one is tariffs. Obviously, if Trump wanted 0:14:52.880 --> 0:14:55.960 to put one hundred and fifty percent tariffs on Chinese 0:14:56.000 --> 0:15:00.440 goods heading into America, that would do serious i economic 0:15:00.480 --> 0:15:03.840 damage to China, but it would also hurt the US. 0:15:03.880 --> 0:15:06.680 Also controls the financial system, so it could do drastic 0:15:06.760 --> 0:15:09.680 things there, but again, anything they do on that front 0:15:09.720 --> 0:15:12.120 will also blow back at the US. So Trump is 0:15:12.160 --> 0:15:15.480 looking for something that he can hit China with that 0:15:16.160 --> 0:15:20.400 wouldn't hurt the US and there's not too many great options. 0:15:20.520 --> 0:15:22.840 He can do some things, but ultimately he wants a 0:15:22.880 --> 0:15:24.640 deal where everybody wins. 0:15:24.960 --> 0:15:27.280 Now, looking ahead, Trump and she will meet at the 0:15:27.280 --> 0:15:30.720 APEX summit in South Korea next week. What are the 0:15:30.840 --> 0:15:32.880 likely outcomes that we can expect from that? 0:15:33.200 --> 0:15:38.120 As long as China agrees not to really disrupt the 0:15:38.120 --> 0:15:41.960 flow of rare earth magnets, then you could see that 0:15:42.000 --> 0:15:44.800 they could come to some sort of agreement where they 0:15:44.880 --> 0:15:49.480 extend this tentative truce. Trump also wants the TikTok deal 0:15:49.600 --> 0:15:52.720 completed and she needs to sign off on that, so 0:15:52.840 --> 0:15:55.200 that's another thing that could come out of it. And 0:15:55.240 --> 0:15:58.440 the other major thing is on soybean purchases. That's a 0:15:58.440 --> 0:16:04.040 big constituency for the US and for Trump. So China's 0:16:04.040 --> 0:16:06.840 not blowing soybeans anymore, and it says it can't because 0:16:07.080 --> 0:16:10.440 the tariffs are too high. But if there's some agreement 0:16:10.480 --> 0:16:12.360 on that, then that could also be something we see 0:16:12.400 --> 0:16:12.760 out of that. 0:16:12.840 --> 0:16:17.680 Meaning So it sounds like there are things that both 0:16:17.760 --> 0:16:21.920 countries want that could still make them walk away and 0:16:21.960 --> 0:16:23.360 say we got to win. Yeah. 0:16:23.440 --> 0:16:26.520 I think the ultimate problem here is that the space 0:16:26.600 --> 0:16:29.080 for a deal is very limited by all the national 0:16:29.480 --> 0:16:32.760 security restrictions that both sides have on each other. I 0:16:32.800 --> 0:16:36.320 think that they don't really see a deal until you 0:16:36.400 --> 0:16:40.360 get particularly Congress and the Hawks and Washington coming to 0:16:40.400 --> 0:16:44.320 the conclusion that it's okay to have China involved. That's 0:16:44.400 --> 0:16:47.720 just politically very difficult to see, particularly with all the 0:16:47.760 --> 0:16:53.000 concerns about Chinese spying, China's military mighty. You'd have to 0:16:53.360 --> 0:16:57.560 fundamentally change the conversation in Washington now. Trump during his 0:16:57.640 --> 0:17:02.080 first term he basically flipped the conversation on China and 0:17:02.120 --> 0:17:06.040 turned it into a bipartisan consensus against China and for 0:17:06.160 --> 0:17:10.320 more hawkish posture towards China. So if anyone can change 0:17:10.359 --> 0:17:15.479 the conversation in Washington toward China, it could be Trump. 0:17:15.840 --> 0:17:19.280 But Beijing's move to leverage its rare earth advantage has 0:17:19.440 --> 0:17:24.040 now boxed Washington in limiting its options and raising the 0:17:24.080 --> 0:17:28.720 possibility that this dispute may have no clear resolution, at 0:17:28.800 --> 0:17:30.000 least not anytime soon. 0:17:30.720 --> 0:17:32.919 If you think about the leverage that both sides have 0:17:33.320 --> 0:17:36.359 on each other. Right now, China has this rare earth card, 0:17:36.880 --> 0:17:39.560 so what is the US doing. They're working over time 0:17:39.600 --> 0:17:41.960 to try and create an alternative supply chain, so they're 0:17:42.000 --> 0:17:45.840 no longer dependent on China's doing the same thing on 0:17:45.920 --> 0:17:48.480 their side. They're trying to maintain this advantage as much 0:17:48.480 --> 0:17:50.919 as possible, and also look at the areas where the 0:17:51.040 --> 0:17:54.919 US has leverage over them, particularly on high end Nvidia chips, 0:17:54.960 --> 0:17:56.800 and they're trying to build their own chips so they're 0:17:56.800 --> 0:18:01.560 not relying on the US. So both economies are necessarily 0:18:01.680 --> 0:18:05.840 looking for ways to work together over the long term. 0:18:06.040 --> 0:18:10.640 They're looking for ways to not be reliant on each other. 0:18:11.000 --> 0:18:14.240 Neither country has any leverage on them, and that's where 0:18:14.280 --> 0:18:17.760 they're heading. And so that dynamic doesn't lead need to 0:18:17.760 --> 0:18:19.800 be optimistic that we're going to get a long term 0:18:19.840 --> 0:18:21.320 conclusion to this anytime soon. 0:18:28.359 --> 0:18:32.000 This is The Big Take Asia from Bloomberg News. I'm wanha. 0:18:32.119 --> 0:18:34.760 To get more from The Big Take and unlimited access 0:18:34.800 --> 0:18:38.000 to all of Bloomberg dot Com, subscribe today at Bloomberg 0:18:38.040 --> 0:18:41.440 dot com slash podcast Offer. If you liked the episode, 0:18:41.560 --> 0:18:43.960 make sure to subscribe and review The Big Take Asia 0:18:44.080 --> 0:18:47.080 wherever you listen to podcasts. It really helps people find 0:18:47.119 --> 0:18:49.439 the show. Thanks for listening, See you next time.