Description: China’s State Council announced additional restrictions on exports that involve technology, data and investments into the defense sector. The move is supposed to enable China to influence market access for Chinese investors overseas and additionally penalize foreign firms whose national markets prohibit Chinese investments. China is expected to impose the restrictions starting 01 Jul which would increase compliance risks for global investors into sensitive sectors such as tech and AI. The US countered the move by imposing restrictions on shipments for semiconductors to Chinese or subsidiaries of Chinese companies located outside the country. The US Department of Commerce stated that these restrictions would primarily target AI chips and different types of semiconductors used in defense or telecom industries.
Impact: Both types of restrictions likely confirm the continuation of the trade standoff despite abiding to the existing trade ceasefire. This in turn likely confirms that the leaders summit in Beijing last month delivered no substantial results on any key issues between the two largest global economies. Similar trade measures on both sides are likely to intensify in the mid to long – term as both China and the US are engaged in a multi – front trade, economic and geopolitical global war for dominance. Arriving to a conclusive and comprehensive trade agreement at this point is highly unlikely, considering the newest security, geopolitical and economic developments on the global stage which are likely to position China and the US into a more hostile stance in the short to mid – term especially regarding trade. China lacks the US technological sophistication in high – tech and AI, while the US lacks China’s access and production of rare earth components which likely positions both countries into a trade standoff currently.