Key Takeaways:
– China has put 28 American firms under export control, prohibiting exports of dual-use items to these entities.
– Ten defence companies were also sanctioned for military sales to Taiwan.
– These measures are inspired by national security concerns, and come ahead of President-elect Donald Trump’s return to the office.
– China’s restrictions can potentially escalate the ongoing trade tussle with the U.S.
Introduction
China, on Thursday, scaled up trade controls on American businesses, affecting dozens of companies on the pretext of safeguarding national security. This defiant move comes against the backdrop of the Biden administration expanding its curbs on Chinese companies and the anticipated return of President-elect Donald Trump to the White House.
China’s Hard-Stance on American Businesses
In a recent announcement by the Ministry of Commerce, China confirmed it is placing 28 U.S. companies under export control. The harsh measure, effective from Thursday, restricts these companies from exporting dual-use items – products that potentially have both civilian and military utility.
Moreover, China has taken further steps by sanctioning ten defense-oriented firms for their involvement in military sales to Taiwan. These firms are subsequently added to China’s “Unreliable Entities List” – a comprehensive list of companies that China perceives as potential threats to its national security.
Taiwan & The Ongoing Tensions
Taiwan – a self-governed island – is a contentious issue in the Sino-American relationship. China categorically claims Taiwan as its own and frowns upon any country’s attempts to foster a diplomatic relationship or indulge in arms deals with the island. China’s recent sanctions on American defense firms come in response to U.S. military aid and sales to Taiwan.
Prospects Under Second Trump Administration
With President-elect Donald Trump’s ascendancy to the White House impending, the trade and diplomatic landscape between the U.S. and China is likely to evolve. During his election campaign, Trump proposed a hard stance on Chinese imports, suggesting tariffs of up to 60% on all Chinese goods.
However, leading financial giant, Goldman Sachs, predicts that essential changes in immigration, trade, and fiscal policies under the second Trump administration will fall short of extreme measures. They anticipate tariffs on imports from China, particularly in the auto sector, but rule out a blanket tariff to mitigate potential economic and political risks.
The Impact of Sanctions
The sanctions imposed by Beijing on American defense firms are anticipated to have a relatively muted impact. Given that U.S. military firms do not sell arms or related goods to China, the actual effect of these sanctions may be limited.
Last month, China initiated investigations against U.S. microchip maker Nvidia for possible violations of Chinese anti-monopoly laws. These series of actions, seen as a back-and-forth trade tussle, stem from the escalating issues between the two powerful nations.
Conclusion
China’s new round of trade controls on U.S. companies indicate a hardening approach towards foreign businesses amidst escalating tensions with the U.S. Whether this move will trigger a more comprehensive trade war or lead to more diplomatic negotiations remains to be seen. One thing is certain – the Sino-American relationship, a cornerstone of global geopolitics, is entering a critical phase as the world awaits President-elect Trump’s new policy approach.