As the U.S. escalates economic sanctions against China, Beijing is preparing its retaliatory measures while cautiously considering the potential economic repercussions, the Wall Street Journal reports. The Biden administration’s recent moves, including tariff hikes and investigations into Chinese trade practices, signal a tougher stance on China ahead of the presidential election.
Beijing’s response to these actions is expected, given President Xi Jinping’s previous directive to retaliate against U.S. pressure. However, Beijing is also mindful of the economic impact on its own country, especially as it seeks to recover from economic challenges.
China has already retaliated by imposing levies on U.S. imports of certain chemicals and is likely to take further steps. However, it aims to balance its response to minimize damage to its economy. Beijing’s retaliation tactics have so far included measures like restricting popular apps in China, which serves both as a response to U.S. actions and as a means of bolstering censorship control.
Despite its desire to retaliate, China faces challenges in responding without causing harm to its own interests. Its reliance on Western high-tech products, for instance, constrains its ability to retaliate against certain U.S. actions without disrupting its own supply chains. While Beijing has developed tools for retaliation, such as its version of an export blacklist and an anti-foreign-sanctions law, it has been cautious in deploying them to avoid significant economic costs.
Bottom line: The mere existence of these tools serves as a deterrent to multinational companies operating in China, potentially increasing the cost for the U.S. in imposing further sanctions on China.
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