In a strategic move mirroring U.S. trade practices, China has expanded its export control regulations, requiring foreign companies to seek Chinese government approval for exporting products containing even minimal amounts of China-originated rare earth materials or those produced using Chinese technology. This policy, announced this month, marks a significant escalation in the ongoing trade tensions between the world’s two largest economies. According to U.S. Trade Representative Jamieson Greer, this rule effectively grants China substantial control over the global technology supply chain, as even a South Korean smartphone manufacturer must now obtain Beijing’s permission to sell devices containing Chinese rare earth materials to markets like Australia. This development underscores China’s adoption of the U.S. foreign direct product rule, a decades-old policy that extends U.S. jurisdiction to foreign-made products, particularly those involving American technology. Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis, noted that Beijing is leveraging Washington’s playbook, having witnessed the effectiveness of U.S. export controls in constraining China’s economic and political options. The roots of this strategy trace back to 2018, when former U.S. President Donald Trump initiated a trade war with China, prompting Beijing to develop a robust toolkit of laws and policies to counter foreign sanctions and interventions. Measures such as China’s Unreliable Entity List and the anti-foreign sanction law, both modeled after U.S. practices, have been deployed to retaliate against U.S. trade actions. However, experts like Jeremy Daum of Yale Law School caution that such reciprocal measures risk escalating tensions and creating a race to the bottom, where neither side emerges victorious.
To hit back at the United States in their trade war, China borrows from the US playbook
