China’s Nuclear Option

Nuclear explosion, photo from National Nuclear Security Administration

I am always willing to admit being wrong. It’s an important part of the learning process. I was wrong about China.

I’ve been thinking that China’s worst-case scenario in the U.S. trade war, the “nuclear option”, would involve selling off a significant portion of their U.S. treasury bonds. Such an action would have a potentially devastating effect on the U.S. stock market, on interest rates… on the American economy as a whole. The notion was one of many things which keep me in a perpetual state of controlled tension. The positive side of it was that China would risk doing significant damage to its own economy, were it to do such a thing.

I was wrong, and the South China Morning Post explained it to me.

A little history on the SCMP: It’s a daily newspaper based out of Hong Kong. Historically it’s been suspicious of the official line from the Chinese leadership, and during the time when Hong Kong was under British governance it had a solid history of press freedom. That changed somewhat when China took over from the British in 1997, although the Chinese allowed it to maintain a level of autonomy greater than that of other news organizations. The consolidation under Chinese authority grew with its purchase in 2016 by Alibaba, a large corporation with strong ties to the Chinese government.

SCMP remains the news source which is given the most freedom by the Chinese government, but it now has many direct lines to the most powerful figures in the country. When speculating on the possible motives and plans of Chinese officials, there is a good chance inside knowledge is at play.

Multiple recent articles provide insight into what the Chinese truly view as their “nuclear option”: banning rare earth mineral exports to the United States. The argument is that the Chinese treasuries, if sold en masse, would simply be bought by the Federal Reserve and would not be particularly damaging. Stopping rare earth mineral sales would cause production of many key technologies – from smartphones to electric cars, from microprocessors to flat-screen monitors – to grind to a halt. China produces more than 90% of the world’s rare earth minerals, currently.

Conveniently for any Western readers, an article was released on the same day where the “nuclear option” was recently discussed; that article was “Steve Bannon says killing Huawei more important than trade deal with China“. In the exclusive interview with SCMP, Trump’s former Chief Strategist explained to the Chinese government-backed newspaper that Trump’s primary goal was not ending forced technology transfer and certainly not actually negotiating a trade deal, but forcing Huawei to close and excluding all Chinese companies from capital markets.

Steve Bannon, a former website editor who has been working to elect and promote nationalists throughout the world – including most of Trump’s closest allies – is telling China that the trade war is merely cover for a direct assault on the growth of Chinese business.

Through the avenues which undoubtedly still remain for discussions between Trump and Bannon, it is not implausible that Bannon has direct knowledge of Trump’s true intent. If that is the case, the American farmers who have trusted Trump are in the midst of being abused by a duplicitous President… and, worse, the gamesmanship is risking wholesale damage to our tech sector.

About the opinions in this article…

Any opinions expressed in this article are the opinions of the author and do not necessarily reflect the opinions of this website or of the other authors/contributors who write for it.

About AlienMotives 1991 Articles
Ex-Navy Reactor Operator turned bookseller. Father of an amazing girl and husband to an amazing wife. Tired of willful political blindness, but never tired of politics. Hopeful for the future.