When U.S. President Donald Trump met Chinese President Xi Jinping last October, the U.S. leader hailed the summit as a “12 out of 10”, with the White House predicting China would ease rare earth export controls and halt retaliation against American firms.
Instead, Beijing has moved swiftly to expand its economic pressure toolkit, even as it avoids overt criticism of Washington over the Iran conflict and signals interest in a stable relationship ahead of another planned summit.
New Tools to Counter U.S. Pressure
Since the meeting, China has introduced a series of measures aimed at strengthening its leverage. These include laws to penalise foreign companies shifting supply chains away from China, tighter controls on rare earth exports, and restrictions on foreign technology in key sectors.
U.S. and Israeli cybersecurity software has been barred from Chinese firms, while foreign AI chips have been excluded from state-backed data centres. Officials are also considering limits on exports of advanced solar manufacturing equipment to the United States.
‘Prepare for War’ Strategy
Analysts say the pattern reflects a broader strategy rather than simple retaliation.
“The hope on the Chinese side is for a longer lasting truce, but it’s very much a ‘if you want peace, prepare for war’ logic,” said Joe Mazur of Trivium China.
The current trade truce, set to expire in November 2026, was partly driven by China’s earlier threat to restrict rare earth exports a move that quickly disrupted U.S. supply chains and brought Washington to the negotiating table.
New Laws Target Foreign Firms
In April, Chinese Premier Li Qiang signed sweeping new regulations allowing authorities to investigate and punish foreign entities accused of undermining China’s supply chains.
The rules give Beijing powers to deny entry, expel individuals and seize assets, marking a significant escalation in economic statecraft.
Business groups warn the measures create an uneven playing field, where foreign firms risk penalties for reducing reliance on China, while Beijing can scale back imports with limited consequences.
Choke Points and Strategic Competition
The economic rivalry has intensified as the United States applies its own pressure, including export controls on advanced semiconductors and investigations into Chinese industrial practices.
China, meanwhile, is seeking new “choke points” in global supply chains from rare earths to solar technology to counter U.S. moves to reduce dependence on Chinese resources.
This competition has already complicated major deals, including negotiations over Chinese purchases of U.S. aircraft, which hinge on access to critical materials needed for production.
High-Stakes Summit Ahead
As Trump prepares for a mid-May meeting with Xi, both sides appear to be entering talks with expanded leverage and deeper mistrust.
Analysts say Beijing is no longer merely reacting to U.S. pressure, but actively building a long-term framework to shape global trade and supply chains on its own terms.
(with inputs from Reuters)
