China bracing for tougher US sanctions

With barely a fortnight before Donald Trump takes over as US President, Chinese President Xi Jinping is bracing for some tough years ahead. China is anticipating a marked deterioration in bilateral relations, toughened by more sanctions. Beijing’s riposte promises to be a blend of hard and conciliatory measures. It has, in fact, been preparing for a period of very strained ties since at least June 2020.

While there has lately been a noticeable softening of rhetoric in statements by Chinese leaders and in China's official media, Chinese analysts and military think tanks assess that the country will confront a period of very strained ties. As Xi Jinping told China's top communist leadership on the last day of 2024, "the journey of Chinese modernisation" wouldn't be just sunny skies, but also "choppy waters, and even dangerous storms."

Earlier, China's Ministry of Commerce had declared it would hit back at sanctions imposed by the US and the EU. In early December 2024, China announced a ban on exports of three minerals — gallium, germanium and antimony — to the US, thereby escalating tech trade restrictions between the two countries. The three minerals are essential for a range of military applications. Last week, it imposed sanctions on 10 US companies, including Lockheed Martin and Raytheon.

At the same time, quite visible in recent weeks has been the change in the tone and tenor of statements made by Chinese leaders.

The People's Daily, official newspaper of the Chinese Communist Party (CCP), has published articles highlighting the benefits of good relations for both countries. On December 31, it published a special commentary calling for increasing the areas of cooperation. It welcomed the renewal of the bilateral agreement on sci-tech cooperation and asserted that this “not only serves the interests of both peoples but also facilitates their joint efforts in addressing global challenges”. It emphasised that “China-US cooperation can lead to fruitful results that are beneficial to both countries and the rest of the world.”

Separately reinforcing this message, Xi Jinping and his wife Peng Liyuan sent New Year's greetings to teachers and students of a Washington state school. Their message highlighted that “during the Second World War, China and the United States fought together for peace and justice, and the friendship between the two peoples stood the test of blood and fire and is growing ever stronger”.

Other Chinese leaders, including Foreign Minister Wang Yi and Ambassador to the US Xie Feng, have recently expressed similar sentiments. China has also sought to maintain bilateral linkages, like sister city and academic ties, despite the sharp downturn in relations.

Assessments by prominent Chinese academics, however, reflect that China's leadership is preparing for US pressure on multiple fronts. Wang Yong, Professor at Peking University's School of International Studies, said that US Secretary of State-designate Mark Rubio may "do everything in his power to suppress and curb China's development" and could play up the Taiwan issue and form military alliances in the Asia-Pacific or Indo-Pacific regions.

Wu Xinbo, Director of the Centre for American Studies at Fudan University, suggested that the US may "challenge China's national interests more often, and even breach our limit on many important issues."

Zheng Yongnian, an expert in international relations and Dean of the Qianhai Institute for International Affairs at the Chinese University of Hong Kong (Shenzhen), wrote that Asia faced an "unprecedented" danger of war and that the strong US desire to pivot to Asia and NATO's strategic shift toward China had destabilised Asia.

In reality, though, Beijing had begun preparing for a serious confrontation with the US since at least July 2020. In an unusual and revealing article, Zhou Li, a former career diplomat and Vice-Minister of the CCP's important International Liaison Department, has listed six measures that China requires to take to respond to the anticipated "full escalation of the struggle." These include decoupling from the US dollar and internationalisation of the renminbi, rapidly boosting food production to prepare against reduction of food exports, like soybean, to China, preparing for medical contingencies, etc.

The latest confirmation that China is prepared for a confrontation with the US is the article by People's Liberation Army (PLA) Colonel Wen Weiying, Associate Professor at the Military Management College of the National Defense University (NDU). It warned: "As the US strategic suppression of China becomes more severe, US sanctions against China will enter a more 'crazy' stage." Colonel Wen Weiying asserted that "China must coordinate and integrate resources from all parties", step up independent innovation and R&D and "break the unjust attempt of the United States to isolate and block the Chinese economy with sanctions." He noted that US sanctions against China focussed on areas of cutting-edge technology, such as electronic information, ships, aerospace, nuclear, satellite, electronic technology, artificial intelligence, semiconductors, quantum computing and unmanned facilities. He acknowledged that the US sanctions in recent years had seriously damaged China's national security, national interests, economic security and development.

Colonel Wen Weiying recommended opposing US sanctions and protectionism. He said that Beijing must be prepared to respond to the imposition of further sanctions by the new Trump administration with hard-hitting retaliatory sanctions. He said countries with close ties to the US and which have advanced and hi-technology would be the targets and pointed out that China had huge cash reserves.

Sanctions against China will likely be accompanied by a sharp deterioration in China-US relations. It will not only have deleterious economic repercussions for China but also impact China politically. China's global ambitions will be adversely affected and Xi Jinping's authority could be severely undermined.