'Get Ready' for Chinese Retaliation, Consultant Says

China has been “consistently” building a set of policy tools it can use to retaliate against the U.S. and other countries in response to trade controls or other restrictions, and companies could soon start seeing China deploy those tools more frequently, said David Hathaway, a consultant on China issues for The Asia Group.

Hathaway, speaking during an event last week hosted by the Atlantic Council, said Beijing could retaliate by placing more export restrictions on critical minerals. China last year put controls on shipments of gallium and germanium, which are used to make semiconductors (see 2307050018, 2310030035 and 2408090012). “You can bet that they're getting ready to potentially use those” more, Hathaway said.

But he also said he doesn’t expect Beijing to use those tools without some sort of provocation.

“I think we can expect the Chinese will largely be reactive. It'll be tit-for-tat,” Hathaway said. “You know, the U.S. does something, China will do something.” Analysts have said President-elect Donald Trump’s promise to hike tariffs against China could spark retaliation from Beijing (see 2411120064).

Beijing has shown over the last several years that it doesn’t want to “be the aggressor," Hathaway said, "but it has very consistently been building a broader set of tools with which it can do that. So, get ready.”