Washington– WASHINGTON (AP) — China likes to condemn the United States for extending its arm far beyond its borders to make demands on non-American companies. But when it sought to respond to American interests this month, Beijing did exactly the same.
As part of expanding the rules for exporting rare earth elements, Beijing announced for the first time that it would do so Requiring foreign companies to obtain approval From the Chinese government to export magnets containing even trace amounts of rare earth materials of Chinese origin or produced with Chinese technology.
This means the South Korean smartphone maker must seek permission from Beijing to sell devices to Australia if the phones contain rare earth materials originating in China, said US Trade Representative Jamison Greer. “This rule essentially gives China control over the entire global economy in the technology supply chain,” he said.
For anyone familiar with American trade practices, China is simply borrowing a decades-old American policy: the foreign direct product rule. It expands the scope of US law to include foreign-made products, and has been regularly used to restrict China’s ability to access certain American technologies made outside the United States, even when they are in the hands of foreign companies.
It is the latest example of Beijing turning to American precedent in search of the tools it needs to stare down Washington in what appears to be a conflict. A prolonged trade war Between the two largest economies in the world.
“China is learning from the best,” said Neil Thomas, a China policy fellow at the Asia Society Policy Institute’s Center for China Analysis. “Beijing is imitating Washington’s playbook because it has seen firsthand how effectively U.S. export controls can constrain its economic development and policy options.”
“The game recognizes the game,” he added.
That was in 2018, when Pres Donald Trump Having launched a trade war with China, Beijing has felt an urgent need to adopt a set of laws and policies that it can easily deploy when new trade conflicts arise. She looked to Washington for ideas.
The Unreliable Entity List, created by China’s Ministry of Commerce in 2020, is similar to the US Department of Commerce’s “Entity List” that restricts certain foreign companies from doing business with the United States.
In 2021, Beijing adopted the Anti-Foreign Sanctions Law, allowing agencies like China’s Foreign Ministry to deny visas and freeze the assets of unwelcome individuals and companies — similar to what the US State Department and US Treasury Department can do.
China’s state-run news agency China News described it as a toolkit against foreign sanctions, interference and long-term jurisdiction, and in a 2021 news report cited an ancient Chinese teaching, saying Beijing would “respond with the enemy’s methods.”
The law “combed through relevant foreign legislation and took into account international law and the basic principles of international relations,” Chinese researcher Li Qingming said, according to the news report. He also said that this might deter the other party from escalating.
Other formal measures adopted by Beijing in the past few years include expanded export controls and foreign investment review tools.
Jeremy Daum, a senior law scholar and senior fellow at the Paul Tsai China Center at Yale Law School, said Beijing often relies on foreign models in developing its laws in non-commercial, non-foreign-related areas. He said that while China seeks capabilities to reciprocate trade and sanctions, the tools are often “very parallel” to those used by the United States.
The two governments also adopted a “holistic view of national security,” expanding the concept to justify restrictions on each other, Daum said.
When Trump launched his trade war with China shortly after returning to the White House earlier this year, Beijing readily deployed its new tools as well as increased tariffs to match those imposed by the US president.
In February, in response to Trump’s first 10% tariff on China over allegations that Beijing had failed to limit the flow of chemicals used to make fentanyl, China’s Ministry of Commerce announced PVH array placementWhich owns Calvin Klein, Tommy Hilfiger and the biotechnology company Illumina, is on the list of unreliable entities.
This has prevented them from engaging in China-related import or export activities and from making new investments in the country. Beijing also announced restrictions on the export of tungsten, tellurium, bismuth, molybdenum and indium, which are important elements for the production of modern high-tech products.
In March, when Trump imposed a second 10% tariff, linked to fentanyl, on Beijing 10 other American companies placed It added 15 American companies to the export control list, including aerospace and defense companies such as General Dynamics Land Systems and General Atomics Aviation Systems, among others, stressing that they “endanger China’s national security and interests.”
Then came the so-called “Liberation Day” tariffs in April, when Beijing not only matched Trump’s 125% higher tariffs, but also blacklisted more US companies and announced Export controls on more rare earth metals. This led to a temporary halt in the shipping of magnets needed to manufacture a wide range of products such as smartphones, electric vehicles, jet aircraft and rockets.
While the new tools have allowed China to challenge the United States, Daum said they are not without risks.
“The risks in such an apparently balanced and fair approach are, first, that what one party views as reciprocal treatment may be interpreted by the other party as escalation,” he said. Second, “in the race to the bottom, no one wins.”