Beijing: During his October summit with Chinese President Xi Jinping, US President Donald Trump called it a “12 out of 10,” and the White House stated China would “effectively eliminate” rare earth export restrictions while halting reprisals against US businesses.
However, despite steering clear of public barbs at Trump regarding the Iran conflict and signaling optimism for a productive leaders’ meeting, Beijing has swiftly broadened its array of economic coercion options directed at Washington, Reuters reported.
Post-October actions include legislation targeting foreign companies relocating supply chains from China, stricter rare earth export permits, prohibitions on foreign AI chips in government-backed data centres, exclusions of US and Israeli cybersecurity tools from Chinese firms and deliberations over limits on solar equipment shipments to the US.
Analysts describe this trend as surpassing simple retaliation. China is exploiting the trade ceasefire to assemble a robust suite of economic leverage instruments — previously mostly a US preserve — in anticipation of a mid-May Trump-Xi encounter.
“The hope on the Chinese side is for a longer lasting, more broadly rooted truce, but it’s very much that ‘if you want peace, prepare for war’ logic,” said Joe Mazur, geopolitics analyst at Beijing-based consultancy Trivium China.
Forged partly by Beijing’s prior-year warnings to throttle rare earth flows to America — which sparked rapid disruptions in US automotive chains and drew Trump to the Busan, South Korea, table with Xi — the truce runs until November 2026.
Far from standing still, China has rolled out a series of retaliatory options to counter production shifts abroad or curbs on its essential imports.
New Powers Against Supply Chain Shifts
China’s Premier Li Qiang introduced the nation’s first such regulations in April. They give officials strong powers to check foreign companies, governments and people. The checks target bias against Chinese supply chains and industries, or “unjustified extraterritorial jurisdiction” over Chinese firms. Penalties include blocking entry, deporting people, and seizing assets.
The Iran crisis sharpened China’s emphasis on these tools, particularly following US Treasury Secretary Scott Bessent’s mid-April threat to penalize purchasers of Iranian crude, where China takes 80% of exports.
Yuyuan Tantian, a social media outlet tied to state broadcaster CCTV, portrayed the steps as countermeasures right after Bessent’s statement: “In the past, our countermeasures were largely concentrated in the trade domain. But today’s international friction is comprehensive, and those tools are no longer sufficient.”
Effective instantly without corporate consultation, the provisions create imbalance, noted Michael Hart, president of the American Chamber of Commerce in China.
“Companies now face an asymmetry: China can reduce purchases from foreign firms with little consequence, while a foreign company that cuts its dependence on China risks investigation,” Hart said.
China’s Ministry of Commerce and Ministry of Foreign Affairs offered no immediate reply to inquiries.
US Counters & Leverage Battles
Washington has wielded its influence too, initiating March investigations into Chinese overcapacity and forced labour alongside semiconductor and equipment export bans that crimp China’s high-end chip capabilities.
“It’s because of export controls that China doesn’t have access to some of the most advanced semiconductor manufacturing equipment in the world,” said Chim Lee, industrial policy analyst at the Economist Intelligence Unit.
The tussle for advantage has snagged China’s prospective purchase of billions in Boeing jets and components. Beijing desires the aircraft and spares, but U.S. sources say Washington insists on Chinese yttrium supplies for engine production.
Choke Point Escalation
Beijing has countered since late 2025 with stricter regulations, obliging chip manufacturers to source at least 50% of equipment domestically for capacity growth, prohibiting certain US and Israeli cybersecurity applications and mandating state-supported data centres to substitute imported AI chips with indigenous versions.
Such extraterritorial controls from China “could disrupt global supply chains on an unprecedented scale, leading to both economic and non-economic damage,” stated the European Chamber in China in its April export control analysis.
With America weaning off Chinese critical minerals, Beijing is pinpointing fresh pressure points, including early discussions with solar gear makers on curbing top-tier tech exports to the U.S.
“There’s going to be more effort on the Chinese side to identify where those choke points are,” Trivium China’s Mazur said. “They’re going to keep throwing things at the wall to see what sticks.”
