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Chinese President Xi Jinping will launch an education campaign calling on comrades to stay true to the Communist Party's founding mission. (Nikkei montage/Reuters)
China up close

Xi raises anti-US banner and pushes party 'education' campaign

Beijing shifts to hard-line stance as tariff war escalates

KATSUJI NAKAZAWA, Nikkei senior staff writer | China

TOKYO -- As the U.S.-China trade war thickens, one of the most effective counter weapons left in Beijing's arsenal may be its rare earth deposits.

"Rare earths are vital to many modern technologies and a wide array of weapon systems used by the U.S. military," China's hawkish newspaper Global Times wrote in an opinion piece earlier this month. "But China controls the vast majority of the world's supply," it added.

It was no coincidence, therefore, that on Monday, President Xi Jinping, accompanied by his top trade negotiator Vice Premier Liu He, inspected a rare earth plant in the southeastern province of Jiangxi.

The plant processes neodymium magnets, which are essential in the production of smartphones and electric vehicles.

State-run CCTV gave the visit extensive coverage. At one point, it zoomed in for a close-up of a banner hung on a wall. "Let's build an internationally competitive rare earth production base," the banner says.

The banner riffs off Mao Zedong's signature policy of zi li geng sheng, or self-reliance, which would be the playbook Beijing turns to as the Trump administration ups the pressure on Huawei Technologies.

"Why did the US threaten to raise tariffs on 'essentially all remaining imports from China' while sparing rare earths?" the Global Times article asked. Rare earths were indeed excluded from the latest list of Chinese exports subject to additional tariffs.

The symbolism of Xi's Jiangxi inspection was clear: If push comes to a shove, China will use access to its rare earths as a weapon.

China has used rare earths as diplomatic ammunition before. In 2010, tensions flared up between China and Japan over the Senkaku Islands in the East China Sea, which China claims as the Diaoyu Islands. Soon thereafter, rare earth exports to Japan came to a halt.

The Jiangxi visit was in line with China's new hard-line policy toward the U.S. The shift in stance began a week before.

"May 13 was an important day for China in terms of domestic politics and diplomacy," one Chinese political source said. "Since that day, China's stance toward the U.S. has become visibly tougher." Xi, who doubles as chief of the Chinese Communist Party, convened a meeting of the party's 25-member Politburo and secured a consensus to take a hard line against the U.S.

Xi Jinping and Vice Premier Liu He arrive at the Chinese People's Political Consultative Conference. Are the president and his close aide putting up a hard-line facade to shroud Beijing's internal contradictions?   © Kyodo

At the Politburo meeting, it was decided that an education campaign on the theme of "staying true to the party's founding mission" will start in June.

The aim of the campaign, a Politburo statement said, was to prepare the country's senior officials to "command the great struggle, great project, great cause, and great dream."

That alone is a little difficult to understand. An interesting explanation for the campaign that has appeared on Chinese social media might help:

"The China-U. S. confrontation is between a big power on the decline and a big power on the ascent. It is a confrontation between the top echelon of monopoly capital in the U.S. and the Chinese Communist Party, which advocates labor values under Marxism-Leninism. It is also a confrontation between different class bases."

This can be considered a quasi-official explanation, given that Chinese internet monitors have not deleted many of the posts that reference it.

It also reads like the definition of Thucydides's trap, first described in print by Harvard professor Graham Allison in a 2012 Financial Times piece. The trap that awaits the rising power and aging hegemon, Allison says, is war.

Beijing's quasi-official explanation for launching the education campaign takes a Leninist viewpoint, refers to periods when China fell under the sway of imperial powers and calls for a struggle against the hegemonic U.S.

From such a standpoint, the 150-page draft trade deal that the Chinese side earlier this month edited down to 105 pages, much to the chagrin of Washington, was nothing but an egregiously "unequal treaty."

Looking back at history, China has often turned to a hard-line foreign policy to mask its problems at home. For the current leadership team, facing headwinds in both politics and the economy, the hard-line policy may be a way to regroup, unite the party and prepare for the coming Trump storm.

A proven formula for consolidating power is to launch a political campaign. Six years ago, Xi learned first hand just how effective such a campaign could be when he began his signature anti-corruption purge.

A former Chinese government official facing corruption charges is escorted by China police officers following his arrest in Manila on Jan. 16. Xi has succeeded in consolidating power through his anti-corruption campaign.   © Reuters

The new education campaign, which the Politburo announced will begin next month, has the potential to be a similarly important endeavor.

After the Politburo endorsed the hard-line stance on May 13, the country moved quickly.

That evening, a CCTV anchor read out a strongly worded commentary during the main news program. "For whatever action the U.S. takes, China has made all preparations."

The commentary ended with one of Xi's pet phrases: "The Chinese economy is not a pond, but an ocean. Whatever the winds and storms, the ocean will still be there."

At midnight, China announced it would levy retaliatory import tariffs on $60 billion worth of U.S. products, starting June 1.

Three days later, CCTV began broadcasting classic movies about the 1950-1953 Korean War, which all portray the story of China coming to the aid of North Korea to resist the American forces.

The People's Republic of China, the "new China," was founded in 1949, and a year later it sent "volunteer soldiers" to Korea to fight on the North's side. Many of those troops lost their lives.

Since the 1960s, Chinese filmmakers have produced many movies about that war woven around "down with U.S. imperialism" plots.

Now Chinese state-run media outlets have adopted a new strategy. After the Trump administration imposed an embargo against Huawei, they published a commentary titled, "International Criticism." The piece squarely condemns Steve Bannon, a former Trump aide and adviser and White House chief strategist. The commentary says "new rightists" like Bannon are "the real enemies of the U.S."

It is unusual for Chinese state-run media outlets to unite in an attack on a foreign individual.

The question is: How will China behave now that it has taken a hard line toward the U. S.?

A security guard walks past a Huawei phone retailer, reflected in a mirror, in Beijing, China. The Chinese tech company is being targeted by the U.S. as the old hegemon and rising power raise the stakes in their battle for the future.    © Reuters

On May 15, U.S. Treasury Secretary Steven Mnuchin referred to the possibility of resuming trade negotiations in Beijing. But China has avoided confirming that a fresh round of talks is on the way.

China runs a risk in maintaining its tough stance: If the situation remains unchanged, the country's economy will suffer under the weight of the U.S.'s high import tariffs.

All eyes are on whether a planned Trump-Xi summit will take place on the sidelines of the Osaka Group of 20 leaders meeting at the end of June.

Yang Jiechi, a Politburo member who supervises diplomacy, visited Japan in mid-May to prepare for Xi's arrival.

Trump shows no sign of backing down. In a recent interview with Fox News, he lashed out at China. "They want to take over the world," he said, adding that any agreement with China cannot be a "50-50" deal.

Trump would like to go back to the original 150-page draft, which he valued as "a very strong deal."

Whether he and Xi even meet in Osaka, though, remains unclear. A bigger question mark is whether Trump and Xi can step back from that trap.

Katsuji Nakazawa is a Tokyo-based senior staff writer and editorial writer at Nikkei. He has spent seven years in China as a correspondent and later as China bureau chief. He is the 2014 recipient of the Vaughn-Ueda International Journalist prize for international reporting.

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