To hit back at the United States in trade war, China borrows from the US playbook

China’s Copycat Strategy in Trade Wars

In a tit-for-tat move, China recently expanded its export rules on rare earths, requiring foreign firms to obtain approval from the Chinese government to export magnets containing even tiny amounts of China-originated rare earth materials. This new regulation has sparked concerns about China’s control over the global technology supply chain.

This tactic by Beijing is reminiscent of the foreign direct product rule long employed by the United States to restrict China’s access to certain technologies. By borrowing from U.S. trade practices, China is effectively leveling the playing field in the ongoing trade war between the two economic giants.

Experts point out that China’s adoption of U.S.-inspired laws and policies is not a new phenomenon. In response to President Donald Trump’s trade war in 2018, Beijing quickly implemented measures such as the Unreliable Entity List and the anti-foreign sanction law, mirroring similar tools used by the U.S. government.

The Chinese government’s strategic approach to trade conflicts reflects a “game recognizes game” mentality, as it draws inspiration from foreign models to develop its own retaliatory measures. By adopting a holistic view of national security, both China and the U.S. justify restrictions on each other’s economic activities.

While China’s copycat strategy has allowed it to push back against U.S. trade actions, experts caution that this approach is not without risks. The potential for escalation and a “race to the bottom” in trade relations poses challenges for both countries.

As China continues to navigate the complexities of global trade, its reliance on foreign precedents underscores the interconnected nature of the modern economic landscape. By learning from the best, Beijing is positioning itself as a formidable player in the evolving dynamics of international trade.