Core Viewpoint - The trade conflict between the US and China has intensified, with the US suspending export licenses for aviation products and technology to COMAC, aiming to pressure China to relax its export controls on rare earth elements [1] Group 1: Rare Earth Elements and Supply Chain Dynamics - The US's reliance on China for rare earth elements has become evident, especially after China imposed export controls on seven categories of medium and heavy rare earths, directly impacting the US military and aerospace industries [1][2] - China currently holds 90% of the global rare earth refining capacity and 85% of the permanent magnet manufacturing share, creating a complete industrial chain from mining to high-end applications [2][3] - The US's Mountain Pass mine has resumed operations but produces only 20,000 tons annually, with two-thirds of the ore still needing to be refined in China, highlighting the structural advantages China holds in this sector [1][2] Group 2: Aviation Industry and Technological Competition - The US's primary target is China's C919 aircraft, which competes with Boeing 737 and Airbus A320, having delivered 16 units and received over 1,000 orders since its commercial debut in 2023 [1][7] - The C919's reliance on the LEAP engine from CFM International exposes China's technological shortcomings, but US restrictions are accelerating China's development of domestic alternatives like the Changjiang 1000 engine [7] - China has established a complete strength verification system for its domestic engines, clearing technical hurdles for certification, paralleling the trajectory of Huawei's Kirin chip advancements [7] Group 3: Global Supply Chain Restructuring - The duopoly of Boeing and Airbus is being challenged, with over 8,000 backlogged orders prompting airlines to seek alternatives, including the C919, which could offer a 10% price advantage [9] - The US underestimated the reverse effects of its technology embargo, as limited rare earth exports from China are insufficient for the development of the sixth-generation fighter jets [9] - China plans to increase C919's annual production capacity to 200 units, countering the impact of US technology bans [9] Group 4: Strategic Implications and Challenges - The "rare earth for technology" negotiation reflects a deeper struggle for global supply chain dominance, with China learning from past mistakes of low-priced exports followed by high-priced imports [10] - Despite advancements, China still faces challenges in material technology and certification standards, needing to overcome generational gaps to gain global market acceptance for its engines [10] - Building confidence in technology beyond the International Civil Aviation Organization's certification system is crucial for China's aviation industry [10]