The conflict between the United States and China, which is under a 90-day tariff truce, is worsening day by day. The two countries are experiencing tensions over China's export controls on rare earths, the U.S. ban on the export of key technologies to China, and the cancellation of student visas. China has strengthened controls over rare earths that the U.S. asked to be lifted, and the U.S. has referenced China's 'Achilles' heel,' the Tiananmen incident, indicating a distancing from reconciliation. Analysts suggest that China is diverting its attention to Europe, deviating from negotiations with the U.S.
According to the Global Times on the 5th, China's major rare earth production areas are strengthening controls over rare earths, recently launching a large-scale crackdown on smuggling. Seven local governments in major rare earth production areas in China, including Hunan Province, Guangxi Zhuang Autonomous Region, Guizhou Province, Jiangxi Province, and Yunnan Province, announced measures to enhance supervision of rare earth management. According to China’s Ministry of Commerce, authorities had previously met on the 12th of last month with ten government ministries and seven local government authorities in Changsha, Hunan Province, to urge the reinforcement of controls over the rare earth supply chain and to prevent illegal outflow, suggesting that the local government's crackdown on smuggling is a follow-up measure.
Rare earths are essential raw materials used in advanced industries, with China mining 70% of the world's reserves and processing 90% of mined rare earths, effectively monopolizing the supply chain. However, last month, China implemented export controls on rare earths and, despite the tariff truce, has not lifted these controls but rather strengthened them, using them as a negotiating tool. In response, the U.S. is pushing back, claiming a violation of the agreement.
The United States, which has escalated tensions with China over Huawei's chip export restrictions and the cancellation of visas for Chinese students, faced strong backlash for comments related to the June 4 Tiananmen incident. According to Agence France-Presse, U.S. Secretary of State Marco Rubio said on the 3rd (local time), a day before the 36th anniversary of the Tiananmen incident, "We honor the courage of those Chinese who were killed while defending basic freedoms." He added, "The Chinese Communist Party tries to censor the truth, but the world will never forget it." Last year, then Secretary of State Antony Blinken also issued a statement commemorating the 35th anniversary of the Tiananmen incident.
The Tiananmen incident is an event in which the Chinese government violently suppressed student protests demanding democracy in Beijing's Tiananmen Square on June 4, 1989, resulting in an estimated 15,000 casualties. This is one of the most sensitive issues within China that the government has consistently denied, and Secretary Rubio has touched upon China's 'Achilles' heel.' In response, China’s Ministry of Foreign Affairs spokesperson Lin Jian expressed strong dissatisfaction on the same day, saying, "China strongly protests against the malicious distortion of history, the intentional attack on the trajectory of political system development, and interference in China's internal affairs."
Amid escalating tensions, China is turning its gaze toward Europe. According to China’s Ministry of Commerce, a high-level summit with the European Union (EU) is scheduled to be held in Beijing in July. The summit is expected to result in a meeting between European leaders and Chinese President Xi Jinping. In this regard, the Ministry stated in a statement the day before, "Both sides (China and the EU) had intensive, candid, and in-depth discussions on urgent and important issues related to economic and trade cooperation" and added that it would enhance efforts to prepare key bilateral agendas.
Ahead of the July summit, China is reportedly preparing a 'gift' for Europe. According to Bloomberg, China is considering an order for 200 to 500 Airbus aircraft. The largest shareholders of Airbus are the French and German governments, and the leaders of those two countries are likely to visit China in July. If China's aircraft order reaches 500 as predicted, it would surpass the previous record of 300 airplanes contracted in 2022.
Airbus has steadily increased its market share in China by establishing an A320 series assembly line in Tianjin. In contrast, its competitor Boeing has faced difficulties in its Chinese operations due to U.S.-China tensions, as Chinese airlines suspended aircraft deliveries last April. Bloomberg reported, "China's actions against Boeing have contributed to Airbus gaining an advantage in a once-balanced aircraft manufacturing market. The dealings between the Chinese government and Airbus could present an opportunity for President Xi to convey messages to President Donald Trump."