As President Trump prepares to meet Chinese President Xi Jinping in Beijing this week, Chinese officials are projecting confidence in their ability to withstand U.S. economic pressure while expanding the legal machinery needed for a longer and more confrontational trade conflict.
The public language surrounding the Thursday and Friday summit is expected to stress stability, cooperation, and the need to manage tensions between the world’s two largest economies. Beneath that diplomatic framing, however, both governments are preparing for a sharper phase of economic rivalry.
In recent weeks, China has introduced a new legal mechanism to resist U.S. sanctions, blocked Meta’s attempt to acquire a Chinese artificial intelligence startup, and formalized rules aimed at punishing foreign companies that help move production out of China. Together, the measures point to a more assertive strategy by Beijing against what it sees as Washington’s sustained effort to restrict China’s economic and technological rise.
Over the past year, the United States and China have exchanged blows through high tariffs, limits on rare earth minerals and advanced technologies, and sanctions targeting major companies. The Beijing summit will test whether Trump and Xi can impose even modest restraints on a growing arsenal of economic weapons.
“China is signaling more strongly that they are locked and loaded,” said Andrew Gilholm, a China expert at Control Risks told The New York Times. “We are on the brink of a much more frequent or widespread use of Chinese countermeasures against U.S. sanctions.”
The confrontation has been building for years. During his first term, Trump made China’s trade practices and technological ambitions central targets of U.S. policy, imposing tariffs on selected sectors and sanctioning specific firms. Beijing’s early responses were cautious and often symbolic, even as it began constructing its own parallel system of blacklists, export controls, and sanctions defenses.
That restrained posture has changed. What began as a cycle of reciprocal penalties has expanded into broader disruptions across global supply chains, forcing governments and companies to calculate the risks of doing business with either side. After years of mostly responding to U.S. moves, China is now targeting firms that comply with Washington’s sanctions and restrictions.
The result is a growing risk that both nations will turn their regulatory systems into instruments of coercion, pulling third countries and multinational businesses into the conflict. Companies operating across both markets may increasingly face a choice between complying with American law or Chinese law.
In April, Chinese authorities unveiled broad new powers allowing regulators to inspect company documents, question employees, and block firms or executives from leaving the country if they are deemed to be assisting efforts to shift supply chains away from China. The rules raise difficult questions for manufacturers serving the U.S. market, many of which have already moved production to countries such as Vietnam or Mexico to avoid elevated tariffs.
The policy builds on China’s earlier action against PVH Corp., the parent company of Calvin Klein and Tommy Hilfiger. After PVH stopped sourcing cotton from China’s Xinjiang region, following a U.S. import ban tied to forced labor concerns, Beijing accused the company of discrimination, opened an investigation, and placed it on its “unreliable entity list,” which can carry penalties including travel restrictions on executives.
“It is posing both a risk and a dilemma: ‘Will you break our law or American law?’” said Sean Stein, president of the U.S.-China Business Council.
China’s posture hardened further after U.S. measures last year, including tariffs reaching 145 percent, port fees on Chinese vessels, and restrictions on critical technologies such as semiconductors and machinery.
This month, after the United States sanctioned five Chinese refineries over their ties to Iranian oil, Beijing instructed the companies to ignore the restrictions. Chinese authorities invoked a 2021 anti-foreign sanctions law, signaling a shift from legal preparation to active enforcement. The affected refineries, including Hengli Petrochemical, are significant players in China’s industrial strategy and major buyers of Iranian crude.
Chinese analysts increasingly view U.S. protectionism as part of a long-term challenge to China’s security, supply chains, and growth. Beijing, meanwhile, has leaned on manufacturing subsidies and incentives to offset weakness in its property sector, helping generate large trade surpluses around the world. Whether the Trump-Xi summit can slow the escalation, or merely pause it, remains uncertain. What is already clear is that both powers are continuing to refine the economic defenses they may soon use more aggressively.
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