China could further increase the pressure on American companies in retaliation for the prices of American President Donald Trump because it retains a firepower for negotiations between the two largest economies in the world in a commercial escalation.
Beijing has already retaliated, increasing the samples from American products by 34% and taking a series of other measures, including export prohibitions on rare earths and an antitrust survey on the Chinese subsidiary of the American chemical giant Dupont.
Unlike the two previous reprisals cycles, which targeted specific categories of American imports, this time Beijing announced an increase in the coverage rate to enter into force from April 10, one day after the entry into force of the “reciprocal” samples of America.
“The Chinese reaction to the first two tariff increases was moderate and patient, but we discovered that patience was not useful,” said Tu Xinquan, dean of the Chinese Institute for WTO studies at the University of International Affairs and the Beijing economy.
But although the “situation is bad; It could be worse, “said Cory Combs, associate director of the Council based in Beijing Trivium China. “Beijing has strategically left space to continue to increase reprisals wherever we or the actions of others threaten its economic interests.”
The latest export controls – seven others have been added to an existing list which included antimony, gallium and germanium – were the “most important mineral controls to date,” he said, adding that Beijing always has room to apply the export controls more strictly and launch new surveys on companies in China.
Chinese officials told state media on Monday that they were ready to reduce loan costs and reduce cash reserve requirements for lenders. They also declared that there was “ample space” to extend the budget deficit of the State and use extraordinary measures to stimulate consumption.
Trump’s commercial offensive arrives at a difficult time for Beijing, which actively courts foreign investments to strengthen a slow economy and deflationary combat pressures.
China had worked to soften tensions with the new administration at the start of the second mandate, which made the unusual decision to send the Vice-President Han Zheng to attend the inauguration of Trump in January.
But China’s restraint ended after its last week last week, one of the biggest targets of the “reciprocal” prices unveiled by Trump. The new prices will bring the average American samples from 60%Chinese products, according to a Goldman Sachs analysis.
China condemned the prices, which led to a sale in global actions. He also intervened at the last minute to interrupt the sale of American Tiktok operations by the Chinese social media group bytedance to a consortium of American investors, seeking to renegotiate the prices before accepting any sale, said a person familiar with the case.
The controls announced on Friday target rare and heavy elements of so-called so-called such as samarium, gadolinium and terbium, which can be essential for countless technologies, in particular optical fibers, data storage and transmission.
American foreign dependence on them is “relatively limited,” said combs. Chinese mines represent around 60% of rare earths in the world, but the country treats almost 90%. However, elements of rare light land, also crucial for a wide range of high -tech products, including medical equipment, electric vehicles and smartphones, to mix as a possible target for Beijing.
The Ministry of Commerce, which grants the approvals of Chinese companies in order to export components and critical machines, could tighten screening measures for American customers, according to experts.
An intermediary based in Beijing which sells Chinese intermediary goods and manufacturing equipment in the United States has said that in recent months, regulators have dragged their feet to issue approvals for articles on its list of goods that require an export license, including critical minerals.
“They don’t give you a no business,” said the intermediary. “They just don’t respond to your request. We have seen in the past during the periods of geopolitical tension that these approvals are stuck. ”
Another avenue that Beijing could explore would be to prevent Chinese companies from making foreign investments in the United States, preventing them from participating in Trump’s efforts to relaunch the manufacturing industry of America. Chinese companies, such as car manufacturer byd and the battery manufacturer, have invested in facilities in the United States, but future investments in American manufacturing require Beijing approval.
China had already made it difficult for some engineers and equipment to leave the country, seeking to protect their domination from the supply chain in electronics and batteries. Apple’s main manufacturing partner, Foxconn, had trouble sending technical Chinese machines and managers to India, where Apple diversified its supply chain.
Experts have warned that Beijing is likely to take reprisal measures against American companies with operations in the country, after having already launched anti-monopoly probes in Google and Nvidia technological groups in recent months.
Ben Kostrzewa, lawyer for Hogan Lovells, underlined the increased risk of American companies faced with a civil dispute to comply with international sanctions under the anti-cancer law. The law, introduced in 2021, had until recently been used to impose sanctions on individuals such as the senator at the time, Marco Rubio, which Beijing considered as adopting laws against the national interests of China.
American companies could also face civil disputes in China if they withdraw from Chinese counterparts due to international sanctions, Kostrzewa said. “There is a risk that foreign companies will face civil action in China under this law. We have not seen China use this law in this way before,” he said.
China’s reaction has already been “very strong,” said you, the Beijing professor. “It is not necessary to add to the measures unless Trump increases the prices or uses the sanctions. Then, the Chinese part will respond. We have already lost hope in the United States.”
Additional Ryan McMoror reports in Beijing and Cheng Leng in Hong Kong