China said Thursday that it was adding dozens of American companies to its export control list in order to “safeguard national security and interests.”
China’s Ministry of Commerce said it would impose sanctions on 28 US entities and prohibit exports of dual-use items to the listed companies beginning Thursday, according to the Global Times, a Chinese daily seen as aligned with Beijing, and the government-run Xinhua news agency. Dual-use items are those that can be used for both civilian and military applications.
China also sanctioned ten defense firms on Thursday for military sales to Taiwan, a self-governing island that China claims as its own, adding them to the country’s “Unreliable Entities List,” according to AFP.
“It really does seem to be a warning shot — that escalation in U.S. policies against China, particularly under Trump, will be met with a more aggressive response,” Jesse Schreger, an associate professor of Macroeconomics at Columbia Business School, told CBS News. “China is signaling it will not take tariffs passively.”
Given China’s status as the world’s manufacturing powerhouse, the threat to refuse to sell dual-use goods to listed companies could have serious consequences, according to Schreger.
It is unclear how China intends to enforce the measures and which products will be classified as dual-use and thus have their sales restricted. Tires, for example, could be viewed as manufactured for both civilian and military purposes, he added.
The moves come as Beijing prepares for President-elect Donald Trump’s return to the White House, and the Biden administration has expanded its restrictions on Chinese firms amid an escalating back-and-forth. During his presidential campaign, Trump also proposed imposing a tariff of up to 60% on all Chinese goods.
“The desire to put high tariffs on China seems credible, if you think back to the first Trump administration and its willingness to use [tariffs] for geopolitical ends,” according to Schreger. “The Biden administration did not undo that; instead, they professionalized it. The Trump administration’s rhetoric may have been more aggressive, but the Biden administration took this economic battle to the next level.”
China announced last month that it was investigating US microchip maker Nvidia for potential anti-monopoly violations.
China’s move comes less than a week after it imposed sanctions on seven companies in response to newly announced US military sales and aid to Taiwan.
Nonetheless, Beijing’s sanctions against American defense companies have a limited impact because US military firms do not sell arms or related goods to China. Some analysts believe that tit-for-tat trade measures could be limited.
“Changes to immigration, trade, and fiscal policy under the second Trump administration will likely be meaningful but fall short of some of the more dramatic proposals,” Goldman Sachs analysts wrote in a recent report. “We expect tariffs on imports from China and autos, but not a universal tariff, which would carry economic and political risks that we think the White House will prefer to avoid.”
