China tightens legal grip as trade war fears explode before Trump visit
US President Donald Trump and Chinese President Xi Jinping (Photo: Getty Images)
While US President Donald Trump is flying to Beijing for talks with Chinese President Xi Jinping, both sides are simultaneously preparing for a prolonged economic war. China is signaling that it no longer fears escalation and is actively building a legal arsenal to strike back against American sanctions, reports The New York Times.
Read also: Trump targets Xi over Taiwan arms as China faces new showdown
What China is doing
In recent weeks, Beijing has introduced a new legal mechanism to counter US sanctions, blocked Meta’s acquisition of a Chinese AI startup, and formalized rules for punishing foreign companies that comply with Western demands to leave China.
In April, Beijing announced new rules giving regulators the authority to inspect corporate records, question employees, and prohibit companies or their executives from leaving China if they move production out of the country.
After the US imposed sanctions on five Chinese oil refineries over their ties to Iran, China ordered companies to ignore those sanctions by using a blocking mechanism introduced in 2021. Chinese state media described this as a transition from accumulating legal reserves to the practical use of legal weapons.
How the US is responding
Over the past year, Washington has raised tariffs on Chinese goods to 145%, introduced fees on Chinese ships entering American ports, and restricted supplies of critical technologies — including semiconductors, chemicals, and equipment.
What this means for business
Companies are finding themselves caught between two fires: comply with American law and violate Chinese law — or vice versa.
“It is posing both a risk and a dilemma: ‘Will you break our law or American law?’” said Sean Stein, president of the US-China Business Council.
A striking example is PVH Corp., the owner of Calvin Klein and Tommy Hilfiger. After refusing to use cotton from Xinjiang, the company was added to China’s unreliable entities list.
What’s at stake in the meeting
The key question is whether Donald Trump and Xi Jinping can agree on at least minimal limits regarding the use of economic weapons.
Last Friday, Taiwan’s parliament significantly cut spending on purchases of American weapons. Due to the strong influence of the opposition in the legislature, only two-thirds of the amount sought by the island’s government was approved.
At the same time, Taiwan managed to sign six arms agreements with the US worth more than $6.6 billion just beforehand. The deals reportedly include M142 HIMARS systems, M109A7 Paladin self-propelled howitzers, replenishment of the army’s missile arsenal, and more.
In addition, as reported by The New York Times, the island is becoming increasingly concerned about its own security because of the threat from China and wants to draw lessons from Ukraine’s combat experience.
