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China like to condemn United States of America To extend its hand far beyond its borders to make demands on non-American companies. But when this month it tried to counterattack American interests, Beijing Did exactly the same.
Expanding export regulations on rare earths, Beijing announced for the first time that foreign companies will need to obtain approval from the Chinese government to export magnets made in China or containing small amounts of rare earth materials produced with Chinese technology.
US Trade Representative Jamieson Greer said this means South Korean smartphone makers will have to ask permission from Beijing to sell devices to Australia if the phones contain rare earth materials made in China. “This rule gives China control over basically the entire global economy in the technology supply chain,” he said.
To anyone familiar with US trade practices, China is simply borrowing a decades-old US policy: foreign direct product regulations. It extends the reach of US law to foreign-made products, and is routinely used to restrict China’s access to certain US technologies made outside the United States, even if they are in the hands of foreign companies.
It’s the latest example of Beijing turning to US precedents for the tools it needs to ignore Washington This appears to be an extended trade war between the world’s two largest economies.
“China is learning from the best,” said Neil Thomas, a fellow in China politics at the Asia Society Policy Institute’s Center for China Analysis. “Beijing is copying Washington’s strategy because it has seen firsthand how effectively US export controls can constrain its own economic growth and political choices.”
He further said, “Sport recognizes sport.”
This idea goes back to at least 2018
This was in 2018, when President donald trump A trade war with China began, leading Beijing to feel the need to adopt a set of laws and policies that it could easily enforce if new trade conflicts arose. And it looked to Washington for ideas.
Its Unreliable Entity List, established in 2020 by the Chinese Ministry of Commerce, resembles the US Commerce Department’s “Entity List” that blocks some foreign companies from doing business with the US.
In 2021, Beijing adopted foreign anti-sanctions legislation, allowing agencies like the Chinese Foreign Ministry to deny visas and seize assets of undesirable individuals and businesses – as can the US State Department and the US Treasury Department.
Calling it a toolkit against foreign sanctions, interference and long-arm jurisdiction, state-run news agency China News cited an ancient Chinese teaching in a 2021 news report saying Beijing would “counterattack with the enemy’s methods.”
“The law has explored relevant foreign law and taken into account the basic principles of international law and international relations,” said Chinese scholar Li Qingming, quoted in the news report. He also said that this could prevent the other side from escalating the dispute.
Other formal measures adopted by Beijing over the past several years include expanded export controls and foreign investment review tools.
Jeremy Daum, senior research scholar in law and senior fellow at Yale Law School’s Paul Tsai China Center, said Beijing often takes inspiration from foreign models in developing its laws in non-trade, non-foreign-related areas. As China seeks the ability to retaliate in trade and sanctions, the tools are often “very parallel” to those of the US, he said.
Daum said the two governments also adopted a “holistic approach to national security”, which expands the concept of justifying sanctions on each other.
Things picked up this year
When Trump launched his trade war with China soon after returning to the White House earlier this year, Beijing deployed its own new tools in addition to raising tariffs equal to those imposed by the US President.
In February, in response to Trump’s first 10% tariffs on China over allegations that Beijing failed to stem the flow of chemicals used to make fentanyl, the Chinese Commerce Ministry put PVH Group, which owns Calvin Klein and Tommy Hilfiger, and biotechnology company Illumina on the Untrusted Entity List.
This prevented them from engaging in China-related import or export activities and making new investments in the country. Beijing also announced export controls on tungsten, tellurium, bismuth, molybdenum and indium, which are critical elements for the production of modern high-tech products.
In March, when Trump imposed a second 10%, fentanyl-related tariff, Beijing placed 10 more U.S. companies on its Unreliable Entity List and added 15 U.S. companies to its export control list, including aerospace and defense companies like General Dynamics Land Systems and General Atomics Aeronautical Systems, claiming they “threaten China’s national security and interests.”
Then came the so-called “Liberation Day” tariffs in April, when Beijing not only matched Trump’s exorbitant tariffs of 125%, but also blacklisted more American companies and announced export controls on more rare earth minerals. This led to disruptions in shipments of magnets needed in the manufacturing of a wide range of products such as smartphones, electric vehicles, jet aircraft and missiles.
While the new tools allow China to keep tabs on the United States, Daum said they are not without risks.
“The dangers in such a balanced and fair approach are that what one side sees as reciprocity, the other may interpret as an escalation of tensions,” he said. And second, “In a race to the bottom, no one wins.”