In a high-stakes communication just two weeks before a critical presidential summit, China’s top trade official formally protested recent U.S. economic restrictions and new rules that threaten to punish companies for shifting supply chains out of the country.
Chinese Vice Premier He Lifeng, the country's lead trade negotiator, expressed "serious concerns" to U.S. Treasury Secretary Bessent and Trade Representative Greer during a video call on April 30, according to a statement from China's state-run Xinhua news agency. The call, described as "candid and constructive," aimed to manage economic disagreements ahead of a planned May 14-15 meeting between President Donald Trump and Chinese leader Xi Jinping. The discussion underscores the fragile truce established at their last meeting in Busan, South Korea, as both sides test the limits of their trade relationship.
"Washington's response so far has been silence. That risks signaling weakness," said Craig Singleton, a China expert at the Foundation for Defense of Democracies (FDD) think tank, in a recent interview. Analysts suggest the Trump administration is deliberately avoiding a public escalation before the summit, even as Beijing lays the legal groundwork to penalize firms that comply with U.S. calls to "derisk" and reduce dependency on Chinese goods.
The new Chinese measures, rolled out in April, empower Beijing to investigate and punish foreign entities that suspend "normal transactions" with Chinese organizations. While no specific industries were named, the rules are seen as a direct countermeasure to U.S. efforts to secure supply chains for strategic goods like critical minerals and medicines. The move puts multinational corporations in a difficult position, caught between Washington's national security directives and Beijing's economic leverage.
The call and the new rules are the latest chapter in a deepening economic rivalry, with the upcoming summit seen as a pivotal moment. "China is clearly in a much more emboldened position," said Reva Goujon, a director at Rhodium Group, noting that U.S. negotiators could accuse Beijing of "violating the spirit of Busan." The market remains on edge, with any de-escalation likely to boost global equities, while further friction could trigger a significant sell-off.
A Widening Economic Battlefield
The direct talks in Washington and Beijing are mirrored by a growing number of proxy economic skirmishes across the globe, particularly in Latin America. In Panama, China has ramped up pressure, including increased inspections on Panama-flagged vessels, following the annulment of two port concessions held by a Hong Kong-based company. Meanwhile, the U.S. and Mexico have initiated a review of their trade agreement specifically to curb imports from Asia, with Mexican authorities investigating firms suspected of helping Chinese products circumvent U.S. tariffs.
This broader conflict extends to strategic infrastructure and resources. In Chile, a proposed Chinese submarine fiber-optic cable has caused a political rift, while Colombia recently imposed a 35 percent levy on steel imports, a move that primarily affects China. In Uruguay, the government has complained of "unimaginable" U.S. pressure to break its trade relationship with Beijing, highlighting the intense competition for influence in the Western Hemisphere.
Markets Brace for Summit Outcome
The quiet from the White House is a stark departure from the trade brinkmanship that preceded the October summit in Busan. The current reticence is seen by market participants as a tactical choice to preserve stability ahead of the May meeting. Business groups have briefed the administration on the risks of China's new anti-derisking rules, which one industry source described as "loading the gun without actually firing it."
The core of the dispute remains the fundamental clash between U.S. efforts to regain "sovereignty" in strategic industries and China's attempts to lock in corporate dependence and prevent supply chain shifts. The outcome of the May 14-15 summit will be critical. A failure to find common ground or de-escalate could formalize the economic battle lines being drawn from Asia to Latin America, with significant consequences for global trade and manufacturing.
This article is for informational purposes only and does not constitute investment advice.
