Threat of Retaliation Looms Large Over U.S.-China Relationship in 2022

With tensions unlikely to abate in 2022, the U.S.-China relationship over the next year is likely to be colored by the omnipresent threat of Chinese retaliation against a variety of U.S. restrictions -- and the main question is not whether China will retaliate, but whether Beijing’s actions will meaningfully impact U.S. commerce, analysts tell Inside U.S. Trade.

Chinese officials have steadily threatened to react to U.S. restrictions in recent years, and the Chinese government in 2021 took steps to shore up its ability to retaliate, enacting a blocking statute that makes companies liable if they abide by restrictions it deems unfair, as well as an “Anti-Foreign Sanctions Law” aimed at anyone or anything involved in the creation of “unfair” restrictions.

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China has a history of being “creative” in exerting economic pressure and coercing other countries, including the U.S., according to Jacob Stokes, a fellow at the at the Center for a New American Security. The easiest response from Beijing would be to “squeeze” individual companies, Scissors said, but such an option would not necessarily satiate the government because those companies facing consequences are not directly responsible for China’s ire.

“You can be mad about the diplomatic boycott, but cutting into Apple’s profits doesn’t really punch back for that,” added Matt Sheehan, a fellow at the Carnegie Endowment for International Peace.

Read the full story and more from Inside U.S. Trade.