Is China Choking the US?
Or is America’s ruling class unleashing havoc on the global economy and blaming China because the governing political ideology ignores facts and causality?
We can now piece together some of what led to the immediate blow-up of Sino-US relations.
In August, Li Chenggang, the trade negotiator for Treasury Secretary Scott Bessent’s Chinese counterpart (vice-premier He Lifeng), reportedly told Bessent that “China will retaliate beyond all expectations” if the two sides couldn’t come to an accommodation.
Having been duly warned, on September 29, the machinery of the US security state dramatically escalated what can only be described as a form of economic containment. The Department of Commerce’s Bureau of Industry and Security quietly but officially adopted a “fifty percent rule” that:
substantially expands the scope of US export controls, imposing significant new compliance obligations on exporters…the rule extends license requirements applicable to entities on the Entity List and the Military End-User (MEU) List to any company that is 50 percent or more owned, directly or indirectly, by one or more of those listed parties.
In plain language, there are ever-growing US export control lists of companies restricted from doing business with the US. Under the new rule, companies now have to police their own supply chains to show that they are in no way associated with any firm that has more than a 50% stake in companies on the restricted lists. This paralyzes the ability of many Chinese companies to trade with the US.
China viewed the new rule for what it was—a dramatic step toward economic decoupling and containment by the US. So, on October 9, China announced its restrictions on rare-earth minerals and new port fees inhibiting imports to the Chinese market.
Do you get it? China warned the US that it had retaliatory measures in hand as a way to get to a stable situation in the wake of Trump’s largely arbitrary tariffs—a coercive threat. The US not only ignored China’s threat; it further escalated its restrictions on China.
And that’s not all.
Bessent lamented that “The hardliners are the Ministry of Commerce and the Ministry of State Security, and the MSS has taken a much greater role in the economy.” That’s true, but he fails to perceive how US actions—specifically US economic containment policies toward China—directly strengthen hardliners within the Chinese state. Someone send him a copy of The Rivalry Peril.
The US, in short, is not conducting itself rationally. I don’t mean that as a diss but rather as an analytical claim. This crisis is a very concrete example of what it looks like when a state’s foreign policy carries out a politics grounded in conspiracy theory and immunity to useful information. As I tell my students, you might not be interested in causality but causality is interested in you!
Zoom out. Short of making the operators of the US state feel a sense of panic or pain, there is nothing you can do to negotiate with the current US brand of authoritarianism. And that seems pretty apocalyptic if you follow it to its logical conclusion.
We’ve always been worried about authoritarian regimes because they cook the books and their numbers can’t be trusted; because they generate so much mistrust in their own system that they struggle to perceive reality correctly; because they undermine the competence of their own statecraft; because they are prone to taking excessive risks; because they are insensitive to the price their people pay for what their states do. Those concerns did not always apply to all authoritarian regimes, but they all apply to the US now.
Unlike most authoritarian regimes, the US regime is a counter-revolutionary one whose guiding myths are very much just made-up bullshit.
Bessent, and some Washington analysts, have tried to argue that China is lashing out due to weakness. But it doesn’t matter if you can shade China a being weak or strong—it’s responding to US economic containment pressure in either case. Moreover, the “weakness” thesis is a very dangerous rationalization that positions China as a scapegoat for catastrophic US choices.
This is partly because China is not in a position of weakness. China has other markets, superior leverage, and increasingly an economy of the future. The US is waging war against itself, swimming in propaganda, sitting on the world’s largest economic bubble in history, and is setup to lose an economic war of attrition.
This visualization is a rather good depiction of something that many in the national security state have known for years—China has control of upstream inputs that US technology and the US economy rely on:
No sane person can determine that the correct thing to do is coerce and contain the country that has managed to establish this kind of control.
Paul Triolo had a wonky analysis of this ongoing crisis that’s worth reading:
Now is the time to revisit my argument about the balance of leverage in Sino-US relations, which I made following the initial announcement of global tariffs in April—America doesn’t have the cards!