How China’s Strategic Adoption of U.S.-Style Export Controls Reshapes Global Trade Dynamics

The Mirror Strategy in Modern Trade Warfare

In an intriguing turn of global trade dynamics, China has begun deploying regulatory weapons that bear striking resemblance to long-established U.S. trade control mechanisms. This strategic mirroring represents a significant evolution in how nations conduct economic conflict, moving beyond traditional tariffs into more sophisticated regulatory territory that extends national jurisdiction across borders., according to related news

Rare Earth Controls: China’s Foreign Direct Product Rule Equivalent

Beijing’s recent expansion of export controls on rare earth minerals marks a pivotal moment in trade policy innovation. The new regulations require foreign companies to seek Chinese government approval for exporting products containing even minimal amounts of China-originated rare earth materials or manufactured using Chinese technology. This approach effectively extends Beijing’s regulatory reach beyond its borders in a manner similar to the U.S. foreign direct product rule that has been part of American trade policy for decades.

As noted by trade experts, this means a smartphone manufacturer in South Korea must now obtain Chinese permission before selling devices containing Chinese rare earth components to markets like Australia. The implications are profound, potentially giving China significant influence over global technology supply chains that depend on these critical materials.

Learning from the Master: China’s Systematic Adoption of U.S. Tactics

The strategic borrowing began gaining momentum around 2018, when the Trump administration’s trade war prompted Beijing to develop a comprehensive toolkit for trade retaliation. Chinese policymakers studied U.S. mechanisms carefully, recognizing the effectiveness of American export controls in constraining economic development and political options.

As Neil Thomas of the Asia Society Policy Institute observed: “China is learning from the best. Beijing is copying Washington’s playbook because it saw firsthand how effectively U.S. export controls could constrain its own economic development and political choices.” This recognition has led to what trade analysts describe as a case of “game recognizing game” in international economic statecraft.

China’s Evolving Trade Defense Toolkit

Over the past several years, Beijing has systematically developed parallel institutions to U.S. trade control mechanisms:, according to industry reports

• The Unreliable Entity List (2020): Mirroring the U.S. Commerce Department’s entity list, this mechanism restricts designated foreign companies from engaging in Chinese trade and investment activities.
• Anti-Foreign Sanction Law (2021): Providing Chinese agencies with authority to deny visas and freeze assets of targeted individuals and businesses, similar to capabilities held by the U.S. State Department and Treasury.
• Expanded Export Controls: Gradually extending control over critical materials and technologies, particularly in the rare earth and strategic minerals sectors.

Chinese state media has explicitly framed these measures as tools against what it terms “foreign sanctions, intervention and long-arm jurisdiction,” invoking traditional Chinese strategic concepts about using an opponent’s methods against them.

Accelerated Deployment in Recent Trade Escalations

The implementation of these tools has intensified throughout 2024 as trade tensions with the United States have escalated. Beijing has demonstrated willingness to deploy its new mechanisms in direct response to U.S. trade actions:, as our earlier report

Following U.S. tariff announcements, China has responded with targeted entity list designations of major corporations, including PVH Group (owner of Calvin Klein and Tommy Hilfiger) and biotechnology firm Illumina. The country has also expanded export controls on critical materials including tungsten, tellurium, and various rare earth minerals essential for high-tech manufacturing.

By March 2024, Beijing had placed additional U.S. aerospace and defense companies on its control lists, including General Dynamics Land Systems and General Atomics Aeronautical Systems, citing national security concerns. The April “Liberation Day” tariffs saw China not only match U.S. tariff rates but also implement further rare earth export restrictions that have disrupted global supply chains for products ranging from smartphones to electric vehicles and military equipment.

The Strategic Implications and Risks

While these mirrored tactics have provided China with more sophisticated means to counter U.S. trade pressure, experts caution that the approach carries significant risks. Jeremy Daum, senior research scholar at Yale Law School’s Paul Tsai China Center, notes that what one side views as reciprocal action, the other may interpret as escalation.

The danger lies in creating a downward spiral where tit-for-tat measures progressively constrict global trade flows. As Daum warns, “in a race to the bottom, nobody wins.” The situation represents a fundamental shift in how economic conflicts are conducted, with both superpowers now armed with similar regulatory weapons that extend their jurisdictional reach across global supply chains.

This development suggests that future trade conflicts will increasingly be fought through control of critical technologies and materials rather than simple tariff measures, creating new challenges for multinational corporations navigating between competing regulatory regimes.

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