| Greetings, I'm Andy Browne, Editorial Director of the Bloomberg New Economy. One of the surprises of President Donald Trump's tariff war against China is the restrained Chinese response — so far, at least. Apple Inc. is still making and selling iPhones in China, despite fears that Beijing might retaliate against U.S. firms. There have been no serious calls for consumer boycotts of U.S. products. And McDonald's outlets are full.
Perhaps that's why investors were spooked by the ominous phrase "Don't say we didn't warn you" in a People's Daily article this week that suggested China might cut off rare-earth exports. Rare earths are critical in the manufacturing of everything from electric cars to high-tech munitions, and the newspaper trotted out the same phrase before Chinese troops invaded India in 1962 and Vietnam in 1979.
 Relax. This People's Daily article didn't carry the weight of an editorial, which reflects the views of the Communist Party's top brass. In any case, as my Bloomberg Opinion colleague David Fickling argues, "rare earths are a paper tiger." The last time China halted rare-earth exports, during a spat with Japan in 2010, the move spectacularly backfired by encouraging production elsewhere. China's share of global supply plunged to 71% from 97%. A potentially more serious move is China's planned "unreliable entities list" of foreign companies and individuals, which looks like tit-for-tat for the U.S.'s blacklisting of Huawei Technologies Co. Still, Beijing will have to calibrate any retaliation carefully: Precipitous action could scare foreign tech companies into moving more of their supply chains offshore. A better Chinese phrase for understanding the country's strategy in the trade war may be "dou er bu po": struggle without breaking. Unlike the Trump administration, which seeks to "decouple" the world's two largest economies, cooler heads in Beijing realize that this would be a calamity for both sides. They want to avoid a rift at all costs.
A much-hyped debate on Fox News between Trish Regan and Chinese TV anchor Liu Xin was a study in Chinese diplomacy by proxy. Xin, who is the face of state news in China, wore jewelry that sent a subtle message to the millions of Chinese who were watching, China is not about to back
down.  Good News on Climate from Europe For a change, the political news out of Europe this week wasn't all bleak: Despite predictions that elections to the European Parliament would pack the body with far-right, anti-immigrant firebrands, the biggest winners were green parties. True, the right gained as the political center collapsed, but not enough to advance its agenda, Michael Birnbaum, Griff Witte and James McAuley wrote in the Washington Post. Instead, the greens are now kingmakers from places like Germany, France and the U.K., propelled by youthful voters focused on the environment as well as economic justice. "We had times when we wondered: Is this a fringe agenda? Now we know it's not. It's the mainstream agenda." --Sergey Lagodinsky, newly elected German Green Party member. The U.S. Slips in Asia Power Rankings The one big idea that animates the Bloomberg New Economy is that wealth and power are shifting east — and that the resulting tensions and conflicts need to be managed by businesses and governments working together. Usefully, the Lowy Institute, one of Australia's leading think tanks, has produced an index that tracks the speed and extent of that transformation. Some of the key takeaways from Lowy's 2019 Asia Power Index: - The U.S. is still on top but China is rapidly closing the gap, largely because Washington is squandering its influence with misguided trade policies.
- China is making the biggest gains with an economy that is growing less dependent on both exports and Western technology markets. In other words, China's rise cannot be stopped by trade wars or U.S. tech blockades.
- Japan, not the U.S., is now the leader of the liberal order in Asia. It is the "quintessential smart power" and rivals China as a provider of infrastructure in South and Southeast Asia.
- India is an underachiever and "will not be the next China."
 Trump, Science and the Wheel of History Scientific thinking has never belonged to the West, Bloomberg Opinion's Noah Smith points out. In fact, a Muslim physicist named Hasan Ibn al-Haytham, born in 965 in what is now present-day Iraq, is widely thought to be the father of experimental science. It's worth pondering that idea as the Trump administration cuts back on funding for basic science, the foundation of national strength, thus hastening America's decline and Asia's rise. Of course, the Chinese government is throwing every resource it can marshal to build its science and technology base. In science, the wheel of history is turning — and Trump is helping it spin faster.  Like Turning Points? Subscribe to Bloomberg All Access. You'll get our unmatched global news coverage and two premium daily newsletters, The Bloomberg Open and The Bloomberg Close, and much, much more. See our limited-time introductory offer. Download the Bloomberg app: It's available for iOS and Android. | 
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