Beijing has activated contingency plans for unprecedented economic warfare against U.S. critical industries, according to classified Ministry of Commerce briefings leaked to Caixin Global. The three-phase retaliation strategy would systematically target America’s defense, financial, and aerospace sectors:
1. Rare Earth Export Ban (Effective Immediately)
- Bullseye: Defense contractors (Lockheed, Raytheon, Boeing Defense)
- Critical Impacts:
✓ F-35 Production Shutdown: 92% of Pentagon’s neodymium (jet engine magnets) comes from China – grounding production within 90 days
✓ EV Apocalypse: Tesla’s battery costs would spike 300% without Chinese dysprosium
✓ Tech Domino Effect: iPhone production delayed (90% of Apple’s terbium supply at risk)
U.S. Countermeasures:
→ $6B Defense Production Act order to restart MP Materials’ California refining
→ Classified stockpiles of gadolinium (nuclear shielding) released to Navy
2. Treasury Thermonuclear Option ($200B Fire Sale)
- Execution: Dumping through Belgian Euroclear accounts to avoid detection
- Fallout:
✓ 10-year yields rocket to 5.8%, adding $2.1T to U.S. debt costs
✓ Emerging market dollar debt crisis (Turkey, Argentina defaults likely)
✓ Fed forced to halt QT and restart bond buying
3. Boeing Strangulation Strategy
- 137 MAX Orders Frozen (25% of Boeing’s backlog) worth $18B
- COMAC C919 Acceleration: 500 jets pre-sold to replace Boeing in Asia
- Cascading Damage:
→ 32,000 U.S. aerospace jobs at risk
→ Spirit AeroSystems bankruptcy imminent
→ GE Aviation slashes LEAP engine production
Global Shockwaves:
• EU Panic: ASML halts DUV shipments to China, fearing Xi could restrict gallium (key for EUV machines)
• Australia’s Windfall: Lynas stock surges 72% on Pentagon rare earth deals
• Black Markets Boom: Russian smugglers stockpile monazite sands for U.S. defense contractors
“This isn’t trade—it’s economic mutually assured destruction,” warned CSIS’s Scott Kennedy, noting China could:
✓ Paralyze 78% of U.S. missile guidance production
✓ Trigger 1970s-level inflation via Treasury chaos
✓ Force Apple to move 30% of iPhone production to India
