Biden set to make his first anti-China move

New US President Biden is reportedly working on an executive order designed to make various US supply chains less reliant on China.

The news comes courtesy of Nikkei, which has got hold of a draft of the order. Following the precedent set by Trump, Biden is largely circumventing the traditional law-making process by simply issuing an executive order whenever he wants something done. The China situation seems to have been deprioritised over domestic matters but it looks like he’s finally getting around to it.

The first order of business seems to be rare-earth elements, largely obscure metals at the bottom of the periodic table that are used in many technological products such as semiconductors and batteries. China is the source of nearly all of the global output of these strategically critical resources, which is a pretty alarming state of affairs for anyone who questions China’s global citizen credentials.

So this seems like a good, if woefully overdue, move by the US government. There must surely be other sources of these things, but China is apparently the only country to have prioritized their extraction. Mining such elements is probably expensive, messy and environmentally dodgy, so it will be interesting to see how the US goes about it, but this dynamic can’t be allowed to continue at a time when the US is inclined to sanction Chinese interests at the drop of a hat.

Apparently there’s talk about building resilient supply chains by working with allies, which is presumed to refer to East Asian US allies such as Japan, South Korea and Taiwan. Australia seems like a big one since it’s such a big country and thus surely a great source of untapped mineral wealth. More broadly this seems to be an attempt to build a global ecosystems of countries trying to reduce their reliance on China for nearly everything.

The WSJ has chatted to some of its mates that are familiar with matters and they reckon Biden is holding a meeting today to discuss supply chain issues. This seems to be largely prompted by the needs of US car-makers, who are panicking about the semiconductor drought.

If the US was capable of acting strategically it would have addressed its over-reliance on China for rare earths and manufacturing before it declared trade war, but that’s hindsight for you. The destruction of Huawei’s smartphone business will be little con solation to the likes of Ford and GM, but what’s done is done.

The question of what Biden intends to do about China seems at least partially answered by this flurry of news. He may take a more diplomatic tone in his direct dealings with the country, but his desire to decouple the economies of the two global giants seems to less than Trump’s. Let the great Balkanisation begin.