via Mike Shedlock:
The Biden administration claims Chinese companies help Russia rebuild its war machine. Our sanction proposal counter is laughable. China’s counterthreat isn’t.
U.S. Takes Aim at Chinese Banks
The Wall Street Journal reports U.S. Takes Aim at Chinese Banks Aiding Russia War Effort
The U.S. is drafting sanctions that threaten to cut some Chinese banks off from the global financial system, arming Washington’s top envoy with diplomatic leverage that officials hope will stop Beijing’s commercial support of Russia’s military production, according to people familiar with the matter.
But as Secretary of State Antony Blinken heads to Beijing on Tuesday, the question is whether even the threat of the U.S. using one of its most potent tools of financial coercion can put a dent in complex and burgeoning trade between Beijing and Moscow that has allowed the Kremlin to rebuild a military badly mauled by more than two years of fighting in Ukraine.
China has heeded Western warnings not to send arms to Russia since the beginning of the war, but since Blinken’s trip to Beijing last year, China’s exports of commercial goods that also have military uses have surged. With China now the primary supplier of circuitry, aircraft parts, machines and machine tools, U.S. officials say Beijing’s aid has allowed Moscow to rebuild its military industrial capacity.
“China can’t have it both ways,” Blinken said in Capri. “It can’t purport to want to have positive friendly relations with countries in Europe, and at the same time be fueling the biggest threat to European security since the end of the Cold War.”
In December, President Biden signed an executive order that gave the Treasury Department authority to sanction banks that aid Russia’s military-industrial complex.
That created bottlenecks in China-Russia trade transactions as major Chinese banks backed out of any roles in facilitating the deals, said Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center think tank and a former employee of Russia’s central bank.
But, she said, those banks have gradually been replaced by more obscure regional Chinese banks with little work in the dollar-denominated economy, and hence less to fear from U.S. sanctions. “Payment chains are slowly being rebuilt,” Prokopenko said. “Both Russians and Chinese are constantly adapting to the new conditions.”
The US Can’t Have It Both Ways
The US has stopped Chinese auto and steel imports. It has sanction phone maker Huawei. It has restricted Chinese access to Nvidia chips.
Why is China supposed to care what the US thinks?
Computer Chip Sanctions Fail
On September 4, 2023, I noted US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips
Trump and Biden both tried to cut off China’s supply of advanced microchips. The US wanted to knock Huawei out of the 5G market. Now, instead of China using US chips, it is producing its own chips.
China Bans iPhone Use for Government Officials
On September 7, in response to US actions, I asked China Bans iPhone Use for Government Officials, Just a Start?
And about that chip ban …
On February 18, 2024 I discussed How China Gets Around US Sanctions on Semiconductors
How Russia Makes a Mockery of US Sanctions in One Picture
Unprecedented US and EU sanctions against Russia have had no impact on Russia’s oil exports or revenue. Who’s the beneficiary?
On December 29, 2023 I noted How Russia Makes a Mockery of US Sanctions in One Picture
On September 19, 2023, I commented Lesson of the Day: Sanctions Don’t Work Because They Create New Markets
Why Sanctions Fail
- Someone always has an incentive to break sanctions.
- Sanctions create new markets.
This is how Russia sells oil and how China gets access to equipment and parts.
In the case of chips, the US has forced China into a path to self-sufficiency. Hooray?!
Tariff Men
Trump says he is a “Tariff Man”. He wants 60 percent tariffs on China and a total blockage of Chinese cars.
But Biden is there too, threatening more tariffs on Chinese steel and cars.
And as noted on April 21, The House Passes a TikTok Ban.
So tell me again why China is supposed to give a damn about what the US thinks.
Meanwhile, note that China controls over 90 percent of the rare earth elements needed for microchips, wind turbines, military-grade magnets, EVs, and rocket guidance systems.
The Inflation Reduction Act was supposed to increase permitting in the US. However, Biden Blocks Rare Earth Mining in Alaska
For discussion of the lead chart and supply of rare earth elements the US needs but does not produce, please see Critical Materials Risk Assessment by the US Department of Energy
Massive Trade War Coming Up
The stage is set for a massive global trade war.
Neither Trump nor Biden have a clue as to what damage a global trade war might do. And we are steamrolling right towards one.
This thought is not even on page 20 of the WSJ yet. It’s headed to page one no matter who wins the election.