Fantasy Accounting, Rare Earth Battles, and Robot Wars: Inside the China Trade War with Christopher Balding

A Capital and Power Exclusive Podcast Preview

Is China winning the trade war? Can the U.S. actually “decouple” its economy from its biggest geopolitical rival? And just how much danger are we in when one authoritarian regime controls the supply of rare earths, pharmaceuticals, and manufacturing muscle? These are the stakes—and no one lays them out more clearly than economist Christopher Balding in his new interview on the Capital and Power podcast.

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Known for his time as a professor at Peking University and years of field research in China and Vietnam, Balding brings deep institutional knowledge, proprietary data, and a blunt style that cuts through the noise. He’s not peddling headlines—he’s decoding the truth. “I’m still writing commentary. I’m actually working on a financial data tech startup... and I also do consulting and work for people based upon China data, which is kind of my wheelhouse,” Balding explains.

On this wide-ranging episode, Balding tackles the big questions: who’s winning the trade war, how real the decoupling effort is, what the U.S. still doesn’t understand about the Chinese economy—and why India, not China, may be the real challenger to American dominance.

Tariff Theater or Economic War?

First, Balding drops the hammer on the true cost of tariffs. Forget the soundbites about 25% here and 30% there. “It is actually 55% on most products,” he clarifies. “When the press was talking about the 30%, that was 30% that was added to the 20 plus percent… from Trump one that Biden had carried over.”

These aren’t marginal hikes—they’re a deliberate strategy to force supply chains to exit China. “What is likely the end state or the goal of the Trump administration is as deep and as broad a decoupling with China as possible,” Balding says. And yes, that includes a crackdown on transshipments through third-party countries like Vietnam.

Rare Earths and the Real Chokeholds

The conversation takes a darker turn when Balding outlines China’s grip on rare earth minerals—the materials that power everything from fighter jets to smartphones. “There are some specific rare earths where they have a 100% global supply chokehold,” he warns. “They have gone up globally and bought up mines around the world… it is very difficult. You can't just go out to other global players and say hey we want to buy this because they're connected or owned by Chinese firms.”

That dominance allows China to weaponize pricing: “They will lower the prices and drive this firm into bankruptcy and then… raise the prices back up.”

Meanwhile, the U.S. Has Chips

But don’t think China holds all the cards. When it comes to semiconductors, Balding says the U.S. still has the leverage. “They’re in the position with chips that we’re in with rare earths,” he says. “They’re a couple of years away from being able to say okay, we can replace… Nvidia, we can replace software design.”

It’s become an economic standoff. “You kind of have this very interesting game of chicken going on between both sides,” Balding explains. “Where China says okay, we will suffer the pain of losing access to chip design software. And let’s see how you guys do losing access to rare earth.”

Can China Crash the Dollar?

Spoiler alert: not likely. Balding throws cold water on the idea that Beijing could tank the U.S. economy by dumping Treasuries. “They’re a relatively small percent of the overall treasury market at this point. I believe it’s under 5%... maybe even 4%,” he says. “First of all they would take a bath… they would lose… significant amounts of money.”

Fantasy Land Banking and the Evergrande Illusion

Then there’s China’s financial system—which Balding bluntly calls “fantasy land.” He recounts reading IPO filings from Chinese banks that classify loans as “doubtful”… only if the borrower has been out of business for more than a year. “Now, I would classify that as more than doubtful. That’s just me,” he deadpans.

As for Evergrande? “They would be responsible I think for almost 70%—if you believe the numbers—they would be responsible for almost 75% of accumulated NPLs in China, okay, by themselves as one company.”

Palantir, Privacy, and the War for Data

In a moment of digital realism, Balding also weighs in on data collection and the surveillance economy. “There needs to be laws passed that absolutely restrict access to that data both by the companies,” he says. On Palantir: “The claim that Palantir makes is that they are not a data company… they provide the products… to sift and manage the data that we have.”

Why India Is the One to Watch

China may be formidable—but Balding argues India is the real wild card. “I think India is absolutely a country I would very much watch,” he says. With a growing population and a political culture pushing for bureaucratic efficiency under Modi, “You are civil servants and it is your job to get things done,” Balding recalls being told.

America’s Future: Still Bright

Despite the geopolitical tensions and technological arms race, Balding is bullish on the U.S. “We’re still the innovative powerhouse of the world… We still have the best universities,” he says. And automation may tilt the cost structure: “There’s really no price difference to employ that robot” in Manhattan vs. Shanghai.

On AI? Don’t believe the hype. “It’s not sentient. It’s not conscious. It’s running financial econometrics,” he says.

Bottom Line: We’re Just Getting Started

“I think we’re in the first inning of what is bound to be an extra innings game,” Balding concludes. “The U.S. has a lot more cards to play.”

This Capital and Power episode doesn’t just ask the right questions—it answers them with surgical precision. From trade math to rare earth maps, robot factories to Chinese IPO fiction, this is the definitive breakdown of the economic battle defining the 21st century.

Don’t miss this episode. Stream it now. Your future portfolio might depend on it.