China's Response to U.S. Chip Controls Offers Clues to Its Trade War Strategy

Capital Economics economists stated that China's retaliation against chip restrictions imposed by the US provides clues about Beijing's future trade war strategy. Due to significantly lower imports from the US, tariff retaliation is not appealing for China. However, economists noted that "non-tariff measures, like export controls, can be targeted more narrowly to cause pain in strategically important sectors," highlighting that China supplies about one-fifth of the three minerals it has banned from exporting to the US. Capital Economics also added that China is a key supplier to the US and a dominant global exporter of many critical minerals like Manganese and Molybdenum.