Beijing Flips the Script on US Tech War and Tests Truce Weeks Before Xi’s Visit

Beijing has launched a barrage of trade countermeasures against seven American companies and organizations, underscoring that despite last year’s truce in South Korea, tensions between Washington and Beijing remain high. The Ministry of Commerce has barred Chinese entities from doing business with these US firms, tightened export controls on drones and related technology, and prohibited cooperation with US compliance and certification bodies.

This move appears to be a response to recent US restrictions on Chinese imports, including the addition of over 40 Chinese companies to the Uyghur Forced Labor Prevention Act entity list. However, Beijing’s latest salvo goes beyond mere retaliation, suggesting it is adopting a more aggressive stance in its dealings with the United States.

China has targeted US firms involved in enforcing US sanctions against Chinese companies. By sanctioning entities such as Compliance Testing for assisting recent Federal Communications Commission measures against Chinese products, Beijing sends a clear message: it will no longer tolerate what it sees as unfair trade practices by American businesses operating on its soil.

This approach also reflects China’s growing willingness to adopt similar tactics employed by the United States in its own attempts to curb Chinese access to Western technologies. William Bratton, an analyst at BNP Paribas, notes that “China is starting to replicate Washington’s attempts to curb Chinese access to Western technologies.” This shift marks a significant change in China’s approach to trade relations with the US.

The export controls on drones and related dual-use items are another key aspect of this new strategy. By imposing strict case-by-case review on such exports, Beijing effectively raises the bar for American firms operating in China and increases costs associated with doing business there. This move highlights the complex web of trade restrictions and countermeasures that now characterizes US-China relations.

The implications of these developments are far-reaching. A recent national security investigation into imported printing and copying equipment installed with foreign software “could be extended to other sectors,” according to Eurasia Group. If this probe leads to a software restriction comparable to last year’s US curbs on Chinese software in connected vehicles, it would have significant consequences for both countries.

In the lead-up to Xi Jinping’s highly anticipated visit to Washington next month, these developments underscore the fragile nature of the truce agreed upon by Trump and Xi last year. While some analysts argue that most measures will likely be “ironed out” by the time Xi arrives in Washington, others warn that more aggressive steps from either side could put the entire agreement at risk.

As the US-China trade war continues to unfold, both sides are engaged in a delicate game of cat and mouse. Beijing’s latest trade countermeasures serve as a warning shot across the bow of US-China relations, underscoring the need for greater caution and diplomacy from Washington in its dealings with China.

The question now is whether these efforts will lead to a genuine breakthrough in US-China relations or merely further entrench existing tensions. Peter Alexander, founder and managing director of Shanghai-based consultancy firm Z-Ben Advisors, notes that “Both sides are attempting to come up with new approaches, new sanctions, new limitations, where they can then potentially horse trade.”