BEIJING – Following President Donald Trump’s October meeting with Chinese President Xi Jinping, which Trump described as a “12 out of 10” success, the White House announced that China would “effectively eliminate” restrictions on rare earth exports and stop retaliating against American businesses.
However, while Beijing has avoided openly criticizing Trump regarding the Iran conflict and expressed interest in positive diplomatic relations, Chinese officials have quietly developed an expanded arsenal of economic pressure tactics directed at Washington.
Following the October summit, China has implemented legislation targeting foreign companies that relocate their supply chains from China, strengthened rare earth licensing requirements, prohibited foreign artificial intelligence chips in government-funded data centers, blocked American and Israeli cybersecurity software from Chinese businesses, and is considering restrictions on solar manufacturing equipment exports to America.
According to experts, this strategy represents more than simple retaliation, with China leveraging the trade ceasefire to develop economic influence mechanisms that were previously Washington’s exclusive territory, ahead of a planned Xi-Trump summit scheduled for mid-May.
“The hope on the Chinese side is for a longer lasting, more broadly rooted truce, but it’s very much that ‘if you want peace, prepare for war’ logic,” stated Joe Mazur, a geopolitics analyst at Beijing-based consultancy Trivium China.
The current truce, which expires in November 2026, emerged partly from Beijing’s threats to limit rare earth exports to America last year. These restrictions created shortages throughout American automotive supply chains within weeks, analysts noted, helping bring Trump to negotiations with Xi in Busan, South Korea.
Rather than remaining passive since then, China has established multiple potential retaliatory options that could counter efforts to move production offshore or impose restrictions on its raw material imports, measures Beijing considers essential for protecting its interests.
This April, Premier Li Qiang approved two unprecedented regulations providing authorities extensive new authority to investigate foreign companies, governments, and individuals accused of discriminating against China’s industrial and supply chains, while enforcing what Beijing terms “unjustified extraterritorial jurisdiction” against Chinese organizations. Officials may refuse entry, expel, and confiscate assets of violators.
The Iranian conflict intensified China’s emphasis on new economic measures, particularly after U.S. Treasury Secretary Scott Bessent threatened sanctions in mid-April against purchasers of Iranian oil exports, with China buying 80% of such exports.
Yuyuan Tantian, a social media platform connected to state broadcaster CCTV, characterized the new regulations explicitly as legal countermeasures, posting two days following Bessent’s warning: “In the past, our countermeasures were largely concentrated in the trade domain. But today’s international friction is comprehensive, and those tools are no longer sufficient.”
The supply chain and extraterritorial interference regulations became effective immediately without opportunity for business input, according to Michael Hart, president of the American Chamber of Commerce in China.
“Companies now face an asymmetry: China can reduce purchases from foreign firms with little consequence, while a foreign company that cuts its dependence on China risks investigation,” Hart explained.
China’s Ministry of Commerce and Ministry of Foreign Affairs did not respond immediately to comment requests.
Washington has implemented its own pressure tactics, initiating trade investigations into excessive industrial capacity and forced labor usage in China during March, alongside export restrictions on semiconductors and chipmaking equipment that have hindered China’s advanced chip production capabilities.
“It’s because of export controls that China doesn’t have access to some of the most advanced semiconductor manufacturing equipment in the world,” noted Chim Lee, industrial policy analyst at the Economist Intelligence Unit.
This leverage competition has also affected negotiations for China to purchase tens of billions of dollars in Boeing aircraft. Beijing seeks the planes and spare parts, while Washington requires Chinese shipments of the rare earth yttrium for jet engine manufacturing, according to U.S. government and company officials familiar with the discussions.
Beijing has countered American actions with increasing regulatory measures. Since late 2025, it has mandated chipmakers use minimum 50% domestically produced equipment when expanding capacity, prohibited specific American and Israeli cybersecurity software, and required state-funded data centers to replace foreign AI chips – promoting domestic alternatives while excluding American suppliers from the Chinese market.
China’s implementation of extraterritorial export controls could “disrupt global supply chains on an unprecedented scale, leading to both economic and non-economic damage,” the European Chamber in China stated in an April report on China’s export controls.
As America works to decrease dependence on Chinese critical minerals, China is rapidly identifying new pressure points. Officials have conducted preliminary discussions with solar panel equipment manufacturers regarding limiting exports of advanced technology to America.
“There’s going to be more effort on the Chinese side to identify where those choke points are,” Trivium China’s Mazur said. “They’re going to keep throwing things at the wall to see what sticks.”
