China gets a head start on a looming trade war with the US
Global trade
In anticipation of a potential trade war between the US and China, President Xi Jinping has shown a new arsenal of measures in response to any trade threat.
China showcased a new range of measures it is ready to employ if Trump follows through on his promise to impose tariffs on the world's second-largest economy. Beijing gave the world a sneak peek into its trade war objectives.
This came after the Biden administration restricted China's access to critical components for artificial intelligence (AI) chips earlier this month. Xi restricted the shipment of many rare minerals with military uses and began an investigation into Nvidia days after the bans.
Important parts required to construct drones have also seen reduced Chinese shipments to the United States and Europe. Beijing mimicked the actions of the us and EU by expanding its export control regime to cover all businesses. Not just those in China but also banning businesses outside its border from the sale of certain items to the US.
The retaliation seems to be carefully timed so it could scare the US without causing a rift in the already delicate bilateral relationship, this was done to avoid any significant economic impact on China. After previous restrictions, exports of the impacted metals to the United States essentially dried this year.
Chinese businesses are already making moves to source chips domestically, so most of the swipes appeared to be symbolic.
Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong, said, "The Chinese government is essentially creating bargaining chips against the US, especially with the anti-trust probe of Nvidia,"
Beddor added, "It doesn't mean they're going use those chips just yet, but they're preparing for negotiations."
(With inputs from the agencies)
