China Refrains from Applying Sanctions

Image credit: Reuters

As the United States tightens its export restrictions on China, President Xi Jinping has so far avoided responding with widespread retaliation targeting American companies. Beijing is taking defensive measure to safeguard its market share from rival nations, while refraining from launching a more destructive counter-offensive. Still, China clearly holds the upper hand, with its manufacturing value-added standing at $5 trillion in 2021 – the same output as the U.S. and Europe combined.

American tech giant Micron Technology is just one of the firms to come in the firing line. The company saw its products in China come under a security review by the country’s cyberspace administration on April 3, following the imposition of U.S.-led restrictions on chipmaking tools and components. Another American firm, the Mintz Group, was suspected of engagement in unlawful business activities and consequently saw its office in Beijing raided on March 27 and its five local staff members detained. Despite these targeted measures, China has yet to deploy a blanket ban on all exports, as the risk of this outweighs the potential gains.

It seems that President Xi Jinping is conscious of the fact that he cannot afford to indulge in a tit-for-tat trade war. Multilateral measures might be too far reaching for Beijing, and could push the fragile balance between the U.S. and China towards the camp of the former. In addition, the escalation of tensions could hasten China’s attempts to build up its own independent supply chains.

Rather than fully retaliating, Beijing is instead leaning towards defensive policies to protect its market share. The Ministry of Commerce proposed a halt to the exports of solar-panel-making tools in January, while the idea of applying similar policies to rare-earth-related technology has been presented. What is clear is that China is leading a global rise in expanding export restrictions on minerals used in the green energy transition.

Therefore, while China has plentiful leverage and resources at its disposal, their president has elected to keep the sanctions powder dry for now. On balance, Chinese officials have continually expressed the country’s interest in U.S. investment and trade, despite the restrictions, and Xi Jinping’s stance reflects an enlightened self-interest.

The company mentioned in this article is Micron Technology, an American tech giant. Founded in 1978, Micron Technology is a semiconductor manufacturer and a supplier of computer memory and storage. It offers various products, such as dynamic random-access memory, static random-access memory, non-volatile memory, flash memory, memory modules, solid-state drives, logic, image sensors, and 3D XPoint memory.

Emmanuel Macron is the person mentioned in this article. He is a French politician serving as President of France since 2017. From 2006 to 2016, he was serving as Member of Parliament, representing the 5th constituency of Paris. Macron is a member of the En Marche!, a centre-liberal party, which he founded in April 2016. He is one of the most influential personalities in Europe, with his policies focused on globalization, digital transformation, and environmental protection.