By Sania Afzal
The latest remarks from China’s Ministry of Commerce (MOFCOM) come at a time of renewed tension in global trade, particularly between Beijing and Washington. The announcement follows the United States’ decision to expand tariffs on Chinese imports and China’s move to tighten export licensing on rare earth elements — strategic materials essential for high-tech industries such as semiconductors, electric vehicles, and defense technologies.
The announcement coincides with preparations for the upcoming APEC Summit in Seoul, where both Chinese and American officials are expected to hold discussions. With Washington’s tariff hikes set to take effect on November 1 and China’s rare-earth licensing regime scheduled for December 1, the next few weeks present a narrow negotiation window.
In the long term, the tone of China–U.S. relations remains shaped by what observers describe as “progressive competitive confrontation” and “mutual decoupling” in sensitive sectors such as semiconductors and artificial intelligence. The new control, therefore, should not be read as a sudden escalation but as a short-term tactical move designed to strengthen China’s bargaining position ahead of possible dialogue.
As analysts at Morgan Stanley note, China’s timing reveals an effort to reset negotiation margins while signaling its capacity to respond to containment measures. However, such tactics carry a risk: each escalation could invite reciprocal measures, potentially leading to a prolonged tit-for-tat cycle. Yet, signals from both capitals suggest that communication channels remain open, with moderate tones on both sides hinting at continued preparation for talks at APEC.
The likely short-term pattern, economists suggest, is a “heat up first, cool down later” cycle — limited escalation followed by de-escalation through negotiation. Markets are expected to react sensitively to headlines around tariff implementation and export licensing enforcement. Whether Washington provides further details on its new restrictions will serve as an early indicator of whether this tension hardens into a new phase or softens into compromise.
China’s move also underscores a larger message to its global partners: any attempt to curb its technological rise or control supply chains will have economic consequences. By refining its export management framework, Beijing is signaling that it intends to safeguard the strategic value of its resources, particularly those vital to emerging technologies. This calculated restraint reflects not isolationism but a bid for leverage and reciprocity in global trade relations.
The prevailing view among market analysts is that the current cycle will likely yield a brief tactical escalation followed by renewed negotiations, leading to partial easing of tensions after the APEC Summit. Yet, the risk of deterioration remains if either side miscalculates or faces domestic political pressures.
The next few months will be crucial. China’s Plenary Session in late October, followed by the Economic Work Conference in December, will outline the country’s short-term economic priorities and longer-term industrial policy adjustments. These meetings are expected to translate strategic ambitions into measurable actions — a process that will shape investor confidence and regional stability heading into 2025.
In essence, Beijing’s actions reveal an approach of steady pragmatism — balancing caution with assertiveness, negotiation with deterrence. As the APEC Summit approaches, both China and the United States will be tested on their willingness to prevent competition from hardening into conflict. For now, the message from Beijing is clear: China will remain open to cooperation, but on terms that respect its sovereignty and the strategic value of its resources.
About the Author:
The author is associated with the Islamabad Policy Research Institute. She can be reached at saniaafzal178@gmail.com
