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A new phase in the trade war: China’s response to US tariffs

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Tensions between China and the United States continue. In response to Washington’s decision, on March 4, China announced the imposition of additional 10-15% tariffs on American imports. The tariffs will apply to American agricultural and food products.

In addition, China has imposed export and investment restrictions on 25 American companies to protect national security, although Beijing officials have chosen not to name specific names. As is known, 10 of these 25 companies have come under Chinese attention for supplying arms to Taiwan.

This decision by China is a retaliatory blow to the United States, which last week imposed an additional 10% tariff on Chinese products. As US President Trump has said, Beijing has been indifferent to the problem of large-scale drug imports from China to the US, which is the main reason for the tariffs.

According to the statement made on March 4, the additional 15% tariffs will take effect from March 10 and will target US chicken, wheat, corn, and cotton imported into China, while additional 10% tariffs will apply to products such as US soybeans, sorghum, pork and beef, aquatic products, fruits, vegetables and dairy products.

“The US unilateral tariff measures seriously violate World Trade Organization rules and undermine the foundation of economic and trade cooperation between China and the US,” the Chinese Ministry of Commerce said in a statement.

In addition, China has banned the import of genetic sequencing from US medical equipment manufacturer Illumina from March 4. The company has been added to China’s “untrusted entities” list. China’s commerce ministry said in a statement that Illumina had suspended transactions with Chinese companies and taken discriminatory measures against Chinese companies.

The tariff hike on China “is likely to hurt the US itself, as it needs cheap Chinese products to reduce inflation. High tariffs on US agricultural products will also negatively affect China,” but countermeasures are politically necessary. “It would be wise to take some symbolic steps without escalating tensions,” said Wang Zhuo, partner at hedge fund Zhouzhu Invest.

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China’s Politburo Reaffirms Key Priorities for 2025

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China’s top leadership has emphasized its commitment to economic stability and high-quality development through technological advancements in 2025, as discussed during a Politburo meeting on Friday. The 24-member decision-making body of the Communist Party highlighted plans to implement proactive macroeconomic policies, boost domestic demand, and enhance the integration of technology and industrial innovation, according to a report from Xinhua.

In addition to economic growth, the government reaffirmed its focus on stabilizing the real estate and stock markets, improving living standards, and advancing high-level economic openness.

 “[We will] mitigate and manage risks in key sectors, counter external shocks, stabilize expectations, stimulate market vitality, and sustain economic recovery,” the Politburo’s statement noted.

The announcement coincided with comments from U.S. President Donald Trump, who stated on Thursday that tariffs on Chinese imports would not only begin at 10 percent on Tuesday as initially planned but would double to an effective rate of 20 percent.

On Saturday, U.S. President Donald Trump approved a memorandum titled “America First Investment Policy,” instructing authorities to deploy all available legal tools to restrict Chinese-linked investments in vital U.S. industries. 

A key focus of the Politburo meeting was reviewing the government work report, which Premier Li Qiang is expected to present at the upcoming NPC session. This report will outline China’s economic targets and priorities for the final year of the 14th Five-Year Plan.

China’s economy expanded by 5 percent last year, supported by strong exports and economic stimulus efforts introduced in late September. However, challenges persist, including weak consumer spending, a prolonged downturn in the property market, demographic shifts, and declining business confidence.

On February 17, President Xi Jinping held a high-profile meeting with leading entrepreneurs, reaffirming his support for the private sector. He encouraged businesses to take on a greater role in driving technological innovation, especially as competition with the U.S. intensifies. This was Xi’s first major engagement with private-sector representatives since 2018. A series of regulatory crackdowns and anti-monopoly investigations since 2021 have impacted business confidence, reducing local government revenue and raising youth unemployment.

To improve market sentiment, the government has been working to lower investment barriers and revise restrictions on private-sector market access. It has also taken steps to limit excessive regulatory enforcement, with a new draft law on private-sector promotion aiming to prohibit arbitrary fines on businesses without clear legal justification.

Another priority for policymakers this year is strengthening domestic demand, especially given the potential for escalating tariff tensions with the U.S. As a result, China is expanding its consumer trade-in program to include more home appliances and digital devices. Additionally, Premier Li has pledged efforts to raise household incomes to stimulate domestic consumption.

The government also aims to create a more consumer-friendly environment by cracking down on fraudulent practices, substandard products, and other factors that undermine consumer confidence.

China’s Politburo Reaffirms Key Priorities for 2025 Read More »

Trump Approves ‘America First Investment Policy’ to Restrict Chinese Investments in Key U.S. Industries

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On Saturday, U.S. President Donald Trump approved a memorandum titled “America First Investment Policy,” instructing authorities to deploy all available legal tools to restrict Chinese-linked investments in vital U.S. industries. 

According to the memorandum, the U.S. government intends to prohibit individuals and entities with ties to China from investing in key American sectors, including technology, critical infrastructure, healthcare, agriculture, energy, and raw materials. Simultaneously, the policy aims to discourage U.S. investors from financially supporting China’s military-industrial complex.

Furthermore, the memorandum classifies China—including Hong Kong and Macau—as a “foreign adversary,” accusing it of systematically channeling investments into U.S. firms and assets to gain access to advanced technologies, intellectual property, and strategic industry influence. Other nations labeled as adversaries in the document include Cuba, Iran, North Korea, Russia, and Venezuela.

The Trump administration is also considering whether to revoke or suspend the 1984 tax treaty between the two countries, arguing that the agreement—along with other economic factors—has played a role in the decline of U.S. manufacturing while facilitating the modernization of China’s military capabilities.

Additionally, the memorandum explores the possibility of expanding restrictions on American investments in China across industries deemed crucial to national security. These include semiconductors, artificial intelligence (AI), quantum computing, biotechnology, hypersonic technology, aerospace, advanced manufacturing, and directed energy systems, among other sectors aligned with China’s military-civil fusion strategy.

A US official told Reuters, “China is exploiting our capital and ingenuity to fund and modernize their military, intelligence, and security operations, posing direct threats to United States’ security with weapons of mass destruction, cyber warfare, and more.”

“National security is directly tied to economic security,” the memorandum states, emphasizing that while China does not permit U.S. companies to control its critical infrastructure, the United States should similarly prevent Chinese entities from acquiring essential American assets. However, the document does not specify when these measures will take effect.

James Wang, head of China strategy at UBS Investment Bank Research, noted in a report on Monday that while the full extent of the policy’s impact remains uncertain, businesses operating within China’s AI supply chain—including hardware, software, and internet firms—could face significant consequences. 

Wang pointed out that past U.S. investment bans have historically led to a 23% decline in affected stocks over a one-year period. “We believe the uncertainty generated by this executive order could create short-term market volatility as investors either take profits or sell off shares as part of their risk management strategies,” he explained. 

Over the weekend, China expressed its readiness to counter what it described as a “discriminatory” U.S. executive order restricting Chinese investments in critical American industries, including technology and infrastructure. 

China’s Ministry of Commerce strongly criticized the move, calling it “deeply unreasonable.”

“This policy is discriminatory and represents a blatant violation of market principles, severely disrupting normal trade and investment cooperation between businesses in both countries,” the ministry stated on Saturday.

“If implemented, this order will only distort investment flows between China and the U.S. and ultimately fail to serve American interests,” the statement continued. The ministry further emphasized that China would closely monitor developments and take necessary steps to safeguard its economic rights and interests.

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Chinese Naval Operations Raise Tensions in Australia’s Exclusive Economic Zone

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A Chinese surface action group, led by the People’s Liberation Army Navy has been detected operating off the coast of Tasmania within Australia’s Exclusive Economic Zone (EEZ). The presence of the Chinese Task Group 107 has prompted heightened surveillance by both Australian and New Zealand military forces.

Notably, on February 22, 2025, Australia’s Defense Department reported that the group was operating approximately 160 nautical miles east of Hobart, having entered Australia’s EEZ earlier that week. “Defense continues to monitor the task group while it remains in the vicinity of Australia’s maritime approaches and is coordinating closely with the New Zealand Defence Force,” the update stated. Australian officials emphasized their commitment to transparency, urging all military forces in the region to uphold the highest standards of safety and professionalism.

While the task group operates in the Tasman Sea, New Zealand’s HMNZS Aotearoa (A11) is positioned in the nearby Bass Strait to provide logistical support to Australian and New Zealand naval forces. According to naval experts, though the drills were held in international waters, Beijing could have given Australia and New Zealand a heads-up much sooner in the interests of safety.

The coordination between the two nations underscores their commitment to maintaining security and stability in the region. Simultaneously, the U.S. and Japan initiated a ballistic missile defense exercise, known as Resilient Shield, on February 25, 2025, in Japan.

Interestingly, China’s Ministry of Defense said that the exercises conducted in international waters complied with international law and did not affect aviation safety. This incident reflects ongoing concerns about regional security dynamics in the Indo-Pacific, especially as China’s military presence grows. It also underscores the importance of international norms governing military operations in shared waters. Political leaders in Australia and New Zealand have called for improved diplomatic communication and adherence to best practices in maritime operations to prevent similar incidents in the future.

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New sanctions on India and China as Trump administration tightens pressure on Iran

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The United States has imposed new sanctions on India, China, and Hong Kong, two months after the Trump administration returned to power. The United States accuses them of financing Iranian militant groups that seek to harm the United States and its allies. Moreover, this is also the fulfillment of Trump’s campaign promise, according to which Washington would apply maximum pressure on Iran’s oil industry.

The sanctions imposed by the US Treasury and State Departments target 30 individuals, entities, and vessels accused of selling and transporting Iranian petroleum products. Among those sanctioned is Hong Kong-based oil broker Petronix Energy Trading Ltd. According to a statement from the Treasury Department, Petronix purchased hundreds of thousands of tons of Iranian oil from the sanctioned Naftiran Intertrade Co.

Earlier this month, on February 4, Trump signed an executive order “to reduce Iran’s oil exports to zero.” The order also states that Iran must never be allowed to acquire or develop nuclear weapons.

As Treasury Secretary Scott Bessent said on February 24, “Iran continues to sell oil and fix destabilization the region through a shadowy network of ships, shippers, and brokers. The United States will use all available tools to seek out and target all aspects of Iran’s oil supply chain and impose appropriate sanctions.”

According to Iran’s Customs Administration, the country receives nearly $2 billion a month from oil sales to China, which accounts for about 5 percent of Iran’s economic output. China has been buying about 90 percent of Iran’s oil exports at deep discounts in recent years.

Earlier this month, the Treasury Department imposed sanctions on more than a dozen individuals and firms from mainland China, India, and the United Arab Emirates, accusing them of facilitating the shipment of millions of barrels of Iranian oil to China.

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Three Years Into Ukraine War, Putin, and Xi Deepen Ties

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Chinese President Xi Jinping reaffirmed his “no limits” partnership with Russian President Vladimir Putin during a phone call on Monday, coinciding with the third anniversary of Russia’s full-scale invasion of Ukraine, according to Chinese state media. The discussions between the two leaders came as U.S. President Donald Trump has been advocating for a swift resolution to the Ukraine conflict. His push for a peace deal raises the possibility that Washington may seek to drive a wedge between Beijing and Moscow while shifting its strategic focus toward competing with China, the world’s second-largest economy.

The call appeared to be a deliberate move to reinforce the strength of their partnership, with both leaders highlighting its durability and long-term nature, independent of external pressures.  Xi underscored the stability of their alliance, emphasizing, “The development strategies and foreign policies of China and Russia are designed for the long term.”

Xi Jinping’s decision not to condemn Russia’s invasion of Ukraine three years ago has allowed China to position itself as a crucial ally for Moscow, consuming Russian oil and supplying essential goods. This choice has strained Beijing’s relations with Europe and galvanized American allies in Asia to strengthen their ties with NATO.

Recently, Chinese officials have voiced support for the “agreement” between the US and Russia to initiate peace talks. At a United Nations Security Council meeting, China’s top diplomat, Wang Yi, declared, “China supports all efforts conducive to peace talks,” coinciding with discussions between US and Russian officials aimed at laying the groundwork for negotiations.

However, comments from American officials suggest underlying US objectives that may concern Beijing. US Senator Marco Rubio highlighted the prospect of future “geopolitical and economic cooperation” between Washington and Moscow as a critical point of discussion. Keith Kellogg, the Trump administration’s envoy for Russia-Ukraine relations, stated that the US aims to compel Putin into actions he finds “uncomfortable,” potentially disrupting Russia’s alliances with Iran, North Korea, and notably, China.

Trump’s approach to the Ukraine conflict has unsettled Washington’s European allies, particularly after excluding them and Ukraine from recent talks with Russia while placing blame on Kyiv for Moscow’s 2022 invasion.

As the war enters its third year, the evolving dynamics between China and Russia, along with the US’s strategic maneuvers, underscore a complex geopolitical landscape. The deepening ties between Xi and Putin reflect not only their shared interests but also a growing challenge for the West, as both countries navigate their partnerships while facing external pressures. The future of their alliance could significantly shape global politics, making it crucial for the international community to closely monitor developments and engage in dialogues that promote stability and peace in the continent.

Author: Liza Barbakadze

Three Years Into Ukraine War, Putin, and Xi Deepen Ties Read More »

China Faces Pushback for Using Police Diplomacy to Assist Developing Nations

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On Thursday, 200 Chinese nationals who had been rescued from online scam operations in Myanmar were repatriated to China, with more expected to return in the coming days, according to China’s Ministry of Public Security.

This repatriation follows multiple visits by Liu Zhongyi, China’s assistant minister for public security, to Myanmar and Thailand. Liu has been working closely with officials in these countries to combat cyber fraud networks, which have been linked to financial crimes and human rights abuses.

Meanwhile, thousands of kilometers away in the southwestern Pacific, a team of Chinese liaison officers recently concluded a police training program in the Solomon Islands. This type of police cooperation could bolster China’s image as a security partner in developing nations.

On February 11, the Chinese embassy in Honiara, the capital of the Solomon Islands, shared on social media that 30 local officers had participated in the recent training. The program covered areas such as DNA evidence analysis, telecom fraud investigations, and crime prevention related to sexual assault and drug offenses. The goal was to enhance officers’ tactical skills, reinforce safety awareness, and improve operational effectiveness.

Li Zhiyong, a professor of international relations at the University of International Business and Economics in Beijing, noted that as China’s global economic footprint expands, so does its need to protect its citizens and business interests abroad.

Policing diplomacy, traditionally a specialized aspect of foreign policy, enables law enforcement personnel to take on diplomatic functions such as intelligence sharing, conflict resolution, and security cooperation, Li explained.

China has largely engaged in international policing cooperation through mechanisms like Interpol and regional security initiatives such as the Shanghai Cooperation Organisation, which was founded in 2001 by China, Russia, and several Central Asian nations.

Chinese police officers have also been stationed at embassies in at least 48 countries, where they collaborate with local authorities to address crimes involving or targeting Chinese nationals. According to China’s Ministry of Public Security, this effort aims to enhance the protection of Chinese citizens and businesses abroad.

Against the backdrop of escalating tensions with the United States, China is positioning itself as a security partner, with policing diplomacy playing an increasingly prominent role.

In 2022, President Xi Jinping introduced the Global Security Initiative, which promotes the concept of “indivisible security,” differing from the US-led “collective security” approach. This initiative calls for increased international cooperation in areas such as counterterrorism, cybersecurity, biosecurity, emerging technologies, and law enforcement.

During the Global Public Security Cooperation Forum held in eastern China last September, the Minister of Public Security announced that China had trained 2,700 foreign law enforcement officers in 2023, with plans to increase that number to 3,000 by 2025. He also noted that China would deploy security consultants to countries requiring assistance.

A report from the International Institute for Strategic Studies (IISS) suggested that by providing police training and equipment, China could enhance its security and diplomatic influence without committing itself as a security guarantor. The report, published in October, highlighted China’s focus on strengthening security ties in strategically significant regions, such as Africa and Latin America, where Chinese businesses have a major presence.

China has also prioritized police training in neighboring countries. In 2023, a delegation from Kyrgyzstan’s interior ministry visited China’s Xinjiang region to discuss expanding cooperation on border security training. Additionally, Chinese law enforcement has participated in joint patrols with counterparts in Laos, Myanmar, Thailand, Vietnam, and Cambodia.

Despite these efforts, China’s policing diplomacy has faced growing international scrutiny.

In December 2022, Italy ended joint police patrols with China following accusations from rights activists that Beijing was using its overseas “service stations” to pressure Chinese expatriates to return to China to face prosecution.

Similarly, in January 2023, Papua New Guinea halted discussions on China’s offer to assist its police force after opposition from Australia. Two months later, Fiji amended a 2011 policing agreement to remove Chinese officers embedded in its law enforcement agencies.

China Faces Pushback for Using Police Diplomacy to Assist Developing Nations Read More »

Chinese Foreign Affairs Minister met with American business groups

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On February 18th, Chinese Foreign Affairs Minister, Wang Yi, while meeting the American business groups, remarked that Washington and Beijing should find a way to stabilise ties. According to him, the countries should direct their attention to significant, practical, and beneficial matters for the two countries and the world.

The minister’s visit to New York is related to the UN Security Council Presidency role that China currently fulfills. Apart from Wang Yi, the meetings were attended by the Chinese Ambassador to the US. They met with the representatives of the US-China Business Council, the US Chamber of Commerce, the National Committee on US-China Relations, the Asia Society, and the Council on Foreign Relations.

The American Business representatives underlined matters such as long-standing economic barriers for American companies, farmers, and workers and called on both sides to cooperate.

In addition to the above-mentioned, Wang Yi spoke in the UN headquarters about the global events and highlighted the importance of peace talks in Ukraine, as well as the Middle East. He added that Gaza and the West Bank should not be „bargaining chips for political trade-offs“. The Chinese representative also stressed the importance of consensus-based politics and stated: „We must not allow the strong to rule the weak, still less revert to the law of the jungle.”

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China Vows ‘Reliable’ Partnership with Latin America as Trump Issues Demands

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China has reaffirmed its commitment to being a “trustworthy” friend and partner to Latin America, as Foreign Minister Wang Yi told his Bolivian counterpart during a meeting at the United Nations on Tuesday. According to a statement from China’s Foreign Ministry, Wang emphasized that Latin America belongs to its people and should not be considered any country’s “backyard.” Beijing continues to strengthen its presence in the region, which has traditionally been within the U.S. sphere of influence.

Wang expressed China’s desire to further enhance its strategic partnership with Bolivia, a country that established diplomatic relations with Beijing in 1985. Over the years, Bolivia has developed strong economic ties with China, particularly through debt and investment. The resource-rich nation currently owes China more than $1.7 billion, according to World Bank data. Meanwhile, Chinese companies have invested an additional $6 billion, mainly in Bolivia’s metals, energy, and transportation sectors, as reported by the American Enterprise Institute think tank.

By contrast, U.S. foreign direct investment in Bolivia stands at around $430 million, with most of it concentrated in the oil, gas, and manufacturing industries, according to data from the U.S. State Department. As Chinese investments in Latin America, particularly in infrastructure and energy, continue to grow, competition between the U.S. and China in the region is expected to intensify during U.S. President Donald Trump’s second term. In the past, Trump was quick to pressure Panama over its ties with China, sending Secretary of State Marco Rubio to warn the country about Chinese influence over the Panama Canal.

Following this, Panama’s President Jose Raul Mulino announced that his country would not renew its membership in Chinese President Xi Jinping’s Belt and Road Initiative, a move that displeased Beijing.

In the lead-up to Rubio’s visit, Trump even refused to rule out military action to regain control over the canal. Meanwhile, Wang reaffirmed China’s support for Latin American nations in safeguarding their sovereignty, independence, and national dignity. He also congratulated Bolivia on joining BRICS, a bloc originally formed by Brazil, Russia, India, and China as an alternative to the Western-led global order. The group has since expanded to include South Africa, Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates.

Trump has repeatedly cautioned BRICS against challenging the dominance of the U.S. dollar, warning members that they could face a 100% tariff if they attempted to do so. However, Brazil, which currently holds the BRICS presidency, recently abandoned plans to push for a common currency, likely to avoid a potential backlash from Trump. Despite China being Brazil’s largest export market—purchasing nearly $70 billion more from the country than the U.S.—Brazil still values its $37 billion in exports to the American market and appears unwilling to jeopardize those trade relations.

As China works to deepen its economic and strategic influence in Latin America, Trump has not hesitated to use trade pressure to maintain U.S. dominance. He has threatened punitive trade measures against Mexico and Colombia unless they take stronger action to curb illegal immigration into the U.S. In response, Mexico deployed 10,000 National Guard members to its northern border to stem the flow of migrants and drugs. Similarly, Colombian President Gustavo Petro reversed a decision to block U.S. military planes carrying deported migrants, preventing a trade conflict with the country’s largest export market.

China Vows ‘Reliable’ Partnership with Latin America as Trump Issues Demands Read More »

Trump’s decision to close USAID – a new opportunity for China?

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Donald Trump called for the immediate closure of USAID in February 2025, with most of its staff expected to be furloughed with pay. The Trump administration has accused the agency of widespread corruption and fraud. It says the agency is “run by radical lunatics.”

According to a statement on USAID’s website, directly hired staff will be placed on administrative leave globally, except those responsible for critical missions, senior leadership, and specially designated programs.

Under Trump’s plan, USAID, which has operated independently for 60 years, would be merged with the State Department, its workforce reduced, and its spending rebalanced according to priorities. However, critics say Trump’s decision would only harm one priority: working against China.

As Professor Huang Yanzhong, a senior fellow for global health at the Council on Foreign Relations, notes, the United States is effectively handing China a golden opportunity to strengthen and expand its influence at a time when China’s economy is struggling.

The Chinese alternative to USAID, the China International Development Cooperation Agency, or China Aid for short, was established by the Chinese government in 2018 to reduce state spending, including on international investment programs such as the Belt and Road Initiative. While Beijing keeps the agency’s foreign aid budget secret, a study by William & Mary’s Global Research Institute found that China provided $1.34 trillion to developing countries between 2000 and 2021, largely through the BRI.

Although China Aid operates differently from USAID, focusing more on loans and visible infrastructure projects than on partnerships and collaborations with local organizations, the agency has an aim of expanding the soft power and influence of their respective governments. China Aid focuses primarily on the Pacific, where the United States, Australia, and other allies are trying to counter China’s efforts to sign security assurance agreements with small but strategically important countries.

On February 5, the Cambodian Mine Action Center (CMAC) said it had received a pledge of $4.4 million from Beijing, exceeding the $2 million the United States donated last year. Ratana said China understands that such support helps “build human networks” and generate economic benefits.

According to Joshua Kurlanczyk, an analyst at the Council on Foreign Relations in New York, the overall shift will be in China’s favor, and the United States will be removed from these processes. In his opinion, Beijing’s increased aid and Washington’s refusal to fund civilian programs “are undermining the democratic potential of virtually every country in the region.”

In Nepal, Chinese officials have reportedly signaled to the Nepalese government that Beijing is ready to replace USAID with its own funds, Annapurna Express reports. Officials in the Cook Islands, a strategically important island chain in the Indo-Pacific, have said they expect USAID to withdraw from the region, which would open the way for China. A delegation from the Cook Islands, led by Prime Minister Mark Brown, will visit China this week to sign an agreement to deepen trade and economic cooperation, including increasing Chinese investment in the country’s infrastructure.

In Colombia, which has received about $385 million in funding through 2024, NGOs that have received USAID funding say the Chinese government is interested in providing them with some funds to fill the gap.

In an interview with Phoenix TV, Hu Zhangliang, vice chairman of CIDCA, did not mention the United States directly but said in passing: “We will not act like some countries that make aid recipients who are unprepared for these situations feel helpless.” Hu also said that China will increase investment in international development and update its approach to foreign aid.

Trump’s decision to close USAID – a new opportunity for China? Read More »

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